As Corrected
February 2, 1995
RESTATED CERTIFICATE OF INCORPORATION
OF
UAL CORPORATION
The present name of the corporation is UAL Corporation (the ''Corporation'').
The Corporation was incorporated under the name of UAL, Inc., the original
Certificate of Incorporation having been filed with the Secretary of State of
the State of Delaware on December 30, 1968. This Restated Certificate of
Incorporation of the Corporation, which both restates and further amends the
provisions of the Corporation's Certificate of Incorporation as heretofore
amended, restated or supplemented, was duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware.
FIRST. The name of the Corporation is UAL CORPORATION
SECOND. The registered office of the Corporation in the State of Delaware is
located at 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent. The name and address of its registered agent is The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Suite L-100, City of Dover,
County of Kent, Delaware 19901.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The total number of shares of capital stock of all classes of which
the Corporation shall have authority to issue is 191,100,022, divided into
eleven (11) classes, as follows: 16,000,000 shares of Preferred Stock, without
par value (hereinafter referred to as ''Serial Preferred Stock''), 25,000,000
shares of Class 1 ESOP Convertible Preferred Stock, of the par value of $0.01
per share (hereinafter referred to as ''Class 1 ESOP Convertible Preferred
Stock''), 25,000,000 shares of Class 2 ESOP Convertible Preferred Stock, of the
par value of $0.01 per share (hereinafter referred to as ''Class 2 ESOP
Convertible Preferred Stock''), 11,600,000 shares of Class P ESOP Voting Junior
Preferred Stock, of the par value of $0.01 per share (hereinafter referred to as
''Class P Voting Preferred Stock''), 9,300,000 shares of Class M ESOP Voting
Junior Preferred Stock, of the par value of $0.01 per share (hereinafter
referred to as ''Class M Voting Preferred Stock''), 4,200,000 shares of Class S
ESOP Voting Junior Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as ''Class S Voting Preferred Stock''), one (1) share
of Class Pilot MEC Junior Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as ''Class Pilot MEC Preferred Stock''), one (1) share
of Class IAM Junior Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as ''Class IAM Preferred Stock''), ten (10) shares of
Class SAM Junior Preferred Stock, of the par value of $0.01 per share
(hereinafter referred to as ''Class SAM Preferred Stock''), ten (10) shares of
Class I Junior Preferred Stock, of the par value of $0.01 per share (hereinafter
referred to as ''Class I Preferred Stock'' and, together with the Serial
Preferred Stock, the Class 1 ESOP Convertible Preferred Stock, the Class 2 ESOP
Convertible Preferred Stock, the Class P Voting Preferred Stock, the Class M
Voting Preferred Stock, the Class S Voting Preferred Stock, the Class Pilot MEC
Preferred Stock, the Class IAM Preferred Stock, and the Class SAM Preferred
Stock, collectively, as ''Preferred Stock'') and 100,000,000 shares of Common
Stock, of the par value of $0.01 per share (hereinafter referred to as ''Common
Stock'').
1
PART I
Serial Preferred Stock
The Board of Directors is expressly authorized to adopt, from time to time, a
resolution or resolutions providing for the issue of Serial Preferred Stock in
one or more series, to fix the number of shares in each such series and to fix
the designations and the powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof, of each such series. The authority of the Board of
Directors with respect to each such series shall include a determination of the
following (which may vary as between the different series of Serial Preferred
Stock):
(a) The number of shares constituting the series and the distinctive
designation of the series;
(b) The dividend rate on the shares of the series, the conditions and dates
upon which dividends thereon shall be payable, the extent, if any, to which
dividends thereon shall be cumulative, and the relative rights of preference,
if any, of payment of dividends thereon;
(c) Whether or not the shares of the series are redeemable and, if
redeemable, the time or times during which they shall be redeemable and the
amount per share payable on redemption thereof, which amount may, but need
not, vary according to the time and circumstances of such redemption;
(d) The amount payable in respect of the shares of the series, in the event
of any liquidation, dissolution or winding up of the Corporation, which amount
may, but need not, vary according to the time or circumstances of such action,
and the relative rights of preference, if any, of payment of such amount;
(e) Any requirement as to a sinking fund for the shares of the series, or
any requirement as to the redemption, purchase or other retirement by the
Corporation of the shares of the series;
(f) The right, if any, to exchange or convert shares of the series into
other securities or property, and the rate or basis, time, manner and
condition of exchange or conversion;
(g) The voting rights, if any, to which the holders of shares of the series
shall be entitled in addition to the voting rights provided by law; and
(h) Any other term, condition or provision with respect to the series not
inconsistent with the provisions of this Article Fourth or any resolution
adopted by the Board of Directors pursuant thereto.
A. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
Unless otherwise indicated, any reference in this Article FOURTH, Part I.A to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part I.A.
Section 1. Number of Shares and Designations. Six million (6,000,000)
shares of the Serial Preferred Stock, without par value, of the Corporation are
constituted as a series thereof designated as Series A Convertible Preferred
Stock (the ''Series A Preferred Stock'').
Section 2. Definitions. For purposes of the Series A Preferred Stock, the
following terms shall have the meanings indicated:
2.1 ''Accrued Dividends'' shall have the meaning set forth in Section 4.1
hereof.
2
2.2 ''Aggregate Involuntary Liquidation Amount'' shall mean the limitation
on the aggregate amount payable upon an involuntary liquidation, dissolution or
winding up in respect of all shares of Serial Preferred Stock outstanding at any
one time contained in Article FOURTH, Part I, paragraph (h) of the Corporation's
Restated Certificate of Incorporation, as the same may be increased or
eliminated from time to time.*
* Article FOURTH, Part I, paragraph (h) was amended, and the limitation on
amounts payable upon an involuntary liquidation was repealed, pursuant to a
Certificate of Amendment dated May 6, 1993.
2.3 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee authorized by such board of directors to perform
any of its responsibilities with respect to the Series A Preferred Stock.
2.4 ''Business Day'' shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
2.5 ''Common Stock'' shall mean the common stock of the Corporation, par
value $5.00 per share.*
2.6 ''Constituent Person'' shall have the meaning set forth in Section 7.5
hereof.
2.7 ''Conversion Price'' shall mean the conversion price per share of Common
Stock for which the Series A Preferred Stock is convertible, as such Conversion
Price may be adjusted pursuant to Section 7. The initial conversion price will
be $156.50.
2.8 ''Current Market Price'' of publicly traded shares of Common Stock or
any other class of capital stock or other security of the Corporation or any
other issuer for any day shall mean the last reported sales price, regular way
on such day, or, if no sale takes place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in either case as
reported on the New York Stock Exchange Composite Tape or, if such security is
not listed or admitted for trading on the New York Stock Exchange (''NYSE''), on
the principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on the National Market System of the National Association
of Securities Dealers, Inc. Automated Quotations System (''NASDAQ'') or, if such
security is not quoted on such National Market System, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such security on such day
shall not have been reported through NASDAQ, the average of the bid and asked
prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of Directors.
2.9 ''Dividend Payment Date'' shall mean May 1, August 1, November 1 and
February 1 in each year, commencing on May 1, 1993; provided, however, that if
any Dividend Payment Date falls on any day other than a Business Day, the
dividend payment due on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date.
2.10 ''Dividend Periods'' shall mean quarterly dividend periods commencing
on May 1, August 1, November 1 and February 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on the Issue Date
and end on and include April 30, 1993).
2.11 ''Fair Market Value'' shall mean the average of the daily Current
Market Prices of a share of Common Stock during the five (5) consecutive Trading
Days selected by the Corporation commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the ''ex'' date with respect to the issuance or distribution
requiring such computation. The term '' 'ex' date,'' when used with respect to
any issuance or distribution, means the first day on which the Common Stock
trades regular way, without the right to receive such issuance or distribution,
on the exchange or in the market, as the case may be, used to determine that
day's Current Market Price.
3
* The Common Stock, par value $5.00 per share, was reclassified pursuant to the
Agreement and Plan of Recapitalization dated as of March 25, 1994, among the
Corporation, the Air Line Pilots Association, International and the
International Association of Machinists and Aerospace Workers, as amended from
time to time, a copy of which is on file in the office of the Secretary of the
Corporation, and this Restated Certificate.
2.12 ''Involuntary Liquidation Preference'' shall have the meaning set forth
in Section 4.1 hereof.
2.13 ''Issue Date'' shall mean the first date on which shares of Series A
Preferred Stock are issued and sold.
2.14 ''Junior Stock'' shall mean the Common Stock, the Series C Preferred
Stock and any other class or series of shares of the Corporation over which the
Series A Preferred Stock has preference or priority in the payment of dividends
or in the distribution of assets on any liquidation, dissolution or winding up
of the
Corporation. The Common Stock shall be deemed Junior Stock notwithstanding that
it may participate in distributions upon an involuntary liquidation, dissolution
or winding up without the Series A Preferred Stock receiving the Voluntary
Liquidation Preference.
2.15 ''non-electing share'' shall have the meaning set forth in Section 7.5
hereof.
2.16 ''Person'' shall mean any individual, firm, partnership, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
2.17 ''Redemption Date'' shall have the meaning set forth in Section 5.3
hereof.
2.18 ''Restated Certificate'' or ''Certificate of Incorporation'' shall mean
the Restated Certificate of Incorporation of the Corporation, as amended from
time to time.
2.19 ''Rights'' shall mean the rights of the Corporation which are issuable
under the Corporation's Rights Agreement dated as of December 11, 1986, and as
amended from time to time, or rights to purchase any capital stock of the
Corporation under any successor shareholder rights plan or plans adopted in
replacement of the Corporation's Rights Agreement.
2.20 ''Securities'' shall have the meaning set forth in Section 7.4(c)
hereof.
2.21 ''Series A Preferred Stock'' shall have the meaning set forth in
Section 1 hereof.
2.22 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.B of this Certificate.
2.23 ''set apart for payment'' shall be deemed to include, without any
action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however, that if any funds for any
class or series of Junior Stock or any class or series of stock ranking on a
parity with the Series A Preferred Stock as to the payment of dividends are
placed in a separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then ''set apart for payment'' with respect to
the Series A Preferred Stock shall mean placing such funds in a separate account
or delivering such funds to a disbursing, paying or other similar agent.
2.24 ''Stated Value'' shall have the meaning set forth in Section 4.1
hereof.
2.25 ''Trading Day'' shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the National Market System of the NASDAQ,
or if such securities are not quoted on such National Market System, in the
applicable securities market in which the securities are traded.
4
2.26 ''Transaction'' shall have the meaning set forth in Section 7.5 hereof.
2.27 ''Transfer Agent'' means First Chicago Trust Company of New York or
such other agent or agents of the Corporation as may be designated by the Board
of Directors as the transfer agent for the Series A Preferred Stock.
2.28 ''Voluntary Liquidation Preference'' shall have the meaning set forth
in Section 4.1 hereof.
Section 3. Dividends.
3.1 The holders of shares of the Series A Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of assets
legally available for that purpose, dividends payable in cash at the rate per
annum of $6.25 per share of Series A Preferred Stock. Such dividends shall be
cumulative from the Issue Date, whether or not in any Dividend Period or Periods
there shall be assets of the Corporation legally available for the payment of
such dividends, and shall be payable quarterly, when, as and if declared by the
Board of Directors, in arrears on Dividend Payment Dates, commencing on May 1,
1993. Each such dividend shall be payable in arrears to the holders of record of
shares of the Series A Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on such record dates, which shall not
be more than 60 days nor less than 10 days preceding the payment dates thereof,
as shall be fixed by the Board of Directors or a duly authorized committee
thereof. Accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any Dividend Payment Date,
to holders of record on such date, not exceeding 45 days preceding the payment
date thereof, as may be fixed by the Board of Directors.
3.2 The amount of dividends payable for each full Dividend Period for the
Series A Preferred Stock shall be computed by dividing the annual dividend rate
by four. The amount of dividends payable for the initial Dividend Period, or any
other period shorter or longer than a full Dividend Period, on the Series A
Preferred Stock shall be computed on the basis of twelve 30-day months and a
360-day year. Holders of shares of Series A Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of cumulative dividends, as herein provided, on the Series A Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series A Preferred Stock that may be in
arrears.
3.3 So long as any shares of the Series A Preferred Stock are outstanding,
no dividends, except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on any class or series of stock of the
Corporation ranking, as to dividends and amounts distributable upon liquidation,
dissolution or winding up, on a parity with the Series A Preferred Stock, for
any period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series A Preferred Stock for all Dividend Periods
terminating on or prior to the date of payment of the dividend on such class or
series of parity stock. When dividends are not paid in full or a sum sufficient
for such payment is not set apart, as aforesaid, all dividends declared upon
shares of the Series A Preferred Stock and all dividends declared upon any other
class or series of stock ranking on a parity as to dividends and amounts
distributable upon liquidation, dissolution or winding up shall be declared
ratably in proportion to the respective amounts of dividends accumulated and
unpaid on the Series A Preferred Stock and accumulated and unpaid on such parity
stock.
3.4 So long as any shares of the Series A Preferred Stock are outstanding,
no dividends (other than (i) the Rights and (ii) dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Stock) shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Stock, nor shall any Junior Stock or
any series of stock of the Corporation ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up, on a parity with
Series A Preferred Stock be redeemed, purchased or otherwise acquired (other
than a redemption, purchase or other acquisition of shares of Common Stock made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange for
Junior Stock), unless in each case the full cumulative dividends on all
outstanding shares of the Series A Preferred
5
Stock and any other stock of the Corporation ranking on a parity with the Series
A Preferred Stock, as to dividends and amounts distributable upon liquidation,
dissolution or winding up shall have been paid or set apart for payment for all
past Dividend Periods with respect to the Series A Preferred Stock and all past
dividend periods with respect to such parity stock.
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary liquidation, dissolution or winding up of
the Corporation before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for the
holders of Junior Stock, the holders of the shares of Series A Preferred Stock
shall be entitled to receive One Hundred Dollars ($100) per share of Series A
Preferred Stock (the ''Stated Value'') plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date of
final distribution to such holders (the ''Voluntary Liquidation Preference'');
but such holders shall not be entitled to any further payment. In the event of
any involuntary liquidation, dissolution or winding up of the Corporation,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Stock, the holders of the shares of Series A Preferred Stock shall be entitled
to receive an amount per share of Series A Preferred Stock (the ''Involuntary
Liquidation Preference'') equal to the Voluntary Liquidation Preference or, in
the event the Corporation's Restated Certificate of Incorporation contains an
Aggregate Involuntary Liquidation Amount, the lesser of (i) the Voluntary
Liquidation Preference or (ii) an amount equal to the product of (a) the
Voluntary Liquidation Preference and (b) a fraction, the numerator of which is
the Aggregate Involuntary Liquidation Amount less the aggregate maximum amounts
distributable upon liquidation of all classes or series of stock of the
Corporation ranking, as to dividends and amounts distributable upon liquidation,
dissolution or winding up, prior to the Series A Preferred Stock and the
denominator of which is the aggregate amount of the voluntary liquidation
preference (including accrued dividends) of all shares of the Series A Preferred
Stock and any other stock of the Corporation ranking, as to dividends and
amounts distributable upon liquidation, dissolution or winding up, on a parity
with the Series A Preferred Stock; but such holders shall not be entitled to any
further payment. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of the shares of Series A Preferred Stock shall be
insufficient to pay in full the Voluntary Liquidation Preference or the
Involuntary Liquidation Preference, as the case may be, and the liquidation
preference on all other shares of any class or series of stock ranking, as to
dividends and amounts distributable upon liquidation, dissolution or winding up,
on a parity with the Series A Preferred Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of Series A Preferred
Stock and any such other parity stock ratably in accordance with the respective
amounts that would be payable on such shares of Series A Preferred Stock and any
such other stock if all amounts payable thereon were paid in full. For the
purposes of this Section 4, (i) a consolidation or merger of the Corporation
with one or more corporations, or (ii) a sale or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class or
classes of stock ranking on a parity with or prior to the Series A Preferred
Stock as to dividends and amounts distributable upon liquidation, dissolution or
winding up of the Corporation, after payment shall have been made to the holders
of the Series A Preferred Stock, as and to the fullest extent provided in this
Section 4, any other series or class or classes of Junior Stock shall, subject
to the respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series A Preferred Stock shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
5.1 The shares of Series A Preferred Stock will be redeemable at the option
of the Corporation by resolution of its Board of Directors, in whole, or, from
time to time, in part, at any time on or after May 1, 1996, at the following
redemption prices per share, if redeemed during the twelve-month period
beginning May 1 of the year indicated below, plus, in each case, all dividends
accrued and unpaid on the shares of Series A Preferred Stock up to the date
fixed for the redemption, upon giving notice as provided hereinbelow:
6
PRICE
--------
1996................. $104.375
1997................. 103.750
1998................. 103.125
1999................. 102.500
2000................. 101.875
2001................. 101.250
2002................. 100.625
2003 and thereafter.. 100.000
5.2 If fewer than all of the outstanding shares of Series A Preferred Stock
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board of Directors and the shares to be redeemed shall be determined pro
rata or by lot or in such other manner and subject to such regulations as the
Board of Directors in its sole discretion shall prescribe.
5.3 At least 30 days, but not more than 60 days, prior to the date fixed for
the redemption of shares of Series A Preferred Stock, a written notice shall be
mailed in a postage prepaid envelope to each holder of record of the shares of
Series A Preferred Stock to be redeemed, addressed to such holder at his post
office address as shown on the records of the Corporation, notifying such holder
of the election of the Corporation to redeem such shares, stating the date fixed
for redemption thereof (the ''Redemption Date''), and calling upon such holder
to surrender to the Corporation, on the Redemption Date at the place designated
in such notice, his certificate or certificates representing the number of
shares specified in such notice of redemption.
On or after the Redemption Date, each holder of shares of Series A Preferred
Stock to be redeemed shall present and surrender his certificate or certificates
for such shares to the Corporation at the place designated in such notice and
thereupon the redemption price of such shares shall be paid to or on the order
of the person whose name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be cancelled. In case less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
From and after the Redemption Date (unless default shall be made by the
Corporation in payment of the redemption price), all dividends on the shares of
Series A Preferred Stock designated for redemption in such notice shall cease to
accrue, and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price of such shares
(including all accrued and unpaid dividends up to the Redemption Date) upon the
surrender of certificates representing the same, shall cease and terminate and
such shares shall not thereafter be transferred (except with the consent of the
Corporation) on the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever. At its election, the
Corporation, prior to the Redemption Date, may deposit the redemption price
(including all accrued and unpaid dividends up to the Redemption Date) of shares
of Series A Preferred Stock so called for redemption in trust for the holders
thereof with a bank or trust company (having a capital surplus and undivided
profits aggregating not less than $50,000,000) in the Borough of Manhattan, City
and State of New York, or in any other city in which the Corporation at the time
shall maintain a transfer agency with respect to such shares, in which case the
aforesaid notice to holders of shares of Series A Preferred Stock to be redeemed
shall state the date of such deposit, shall specify the office of such bank or
trust company as the place of payment of the redemption price, and shall call
upon such holders to surrender the certificates representing such shares at such
place on or after the date fixed in such redemption notice (which shall not be
later than the Redemption Date) against payment of the redemption price
(including all accrued and unpaid dividends up to the Redemption Date). Any
interest accrued on such funds shall be paid to the Corporation from time to
time. Any moneys so deposited which shall remain unclaimed by the holders of
such shares of Series A Preferred Stock at the end of two years after the
Redemption Date shall be returned by such bank or trust company to the
Corporation.
7
If a notice of redemption has been given pursuant to this Section 5 and any
holder of shares of Series A Preferred Stock shall, prior to the close of
business on the day preceding the Redemption Date, give written notice to the
Corporation pursuant to Section 7 below of the conversion of any or all of the
shares to be redeemed held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation, and
any necessary transfer tax payment, as required by Section 7 below), then such
redemption shall not become effective as to such shares to be converted, such
conversion shall become effective as provided in Section 7 below, and any moneys
set aside by the Corporation for the redemption of such shares of converted
Series A Preferred Stock shall revert to the general funds of the Corporation.
Section 6. Shares to be Retired. All shares of Series A Preferred Stock
which shall have been issued and reacquired in any manner by the Corporation
(excluding, until the Corporation elects to retire them, shares which are held
as treasury shares) shall be restored to the status of authorized but unissued
shares of Serial Preferred Stock, without designation as to series.
Section 7. Conversion. Holders of shares of Series A Preferred Stock shall
have the right to convert all or a portion of such shares into shares of Common
Stock, as follows:
7.1 Subject to and upon compliance with the provisions of this Section 7, a
holder of shares of Series A Preferred Stock shall have the right, at his or her
option, at any time after 40 days after the Issue Date, to convert such shares
into the number of fully paid and nonassessable shares of Common Stock obtained
by dividing the aggregate Stated Value of such shares by the Conversion Price
(as in effect on the date provided for in the last paragraph of Section 7.2) by
surrendering such shares to be converted, such surrender to be made in the
manner provided in Section 7.2; provided, however, that the right to convert
shares called for redemption pursuant to Section 5 shall terminate at the close
of business on the day preceding the Redemption Date, unless the Corporation
shall default in making payment of the cash payable upon such redemption under
Section 5 hereof. Certificates will be issued for the remaining shares of Series
A Preferred Stock in any case in which fewer than all of the shares of Series A
Preferred Stock represented by a certificate are converted.
7.2 In order to exercise the conversion right, the holder of shares of
Series A Preferred Stock to be converted shall surrender the certificate or
certificates representing such shares, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent in the Borough of
Manhattan, City of New York, accompanied by written notice to the Corporation
that the holder thereof elects to convert Series A Preferred Stock. Unless the
shares issuable on conversion are to be issued in the same name as the name in
which such share of Series A Preferred Stock is registered, each share
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
Holders of shares of Series A Preferred Stock at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to such
Dividend Payment Date. However, shares of Series A Preferred Stock surrendered
for conversion during the period between the close of business on any dividend
payment record date and the opening of business on the corresponding Dividend
Payment Date (except shares converted after the issuance of a notice of
redemption with respect to a Redemption Date during such period, which shall be
entitled to such dividend on the Dividend Payment Date) must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
Dividend Payment Date. A holder of shares of Series A Preferred Stock on a
dividend payment record date who (or whose transferee) tenders any such shares
for conversion into shares of Common Stock on such Dividend Payment Date will
receive the dividend payable by the Corporation on such shares of Series A
Preferred Stock on such date, and the converting holder need not include payment
of the amount of such dividend upon surrender of shares of Series A Preferred
Stock for conversion. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Common Stock issued upon such
conversion.
8
As promptly as practicable after the surrender of certificates for shares of
Series A Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 7, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in Section 7.3.
Each conversion shall be deemed to have been effected immediately prior to the
close of business on the date on which the certificates for shares of Series A
Preferred Stock shall have been surrendered and such notice (and if applicable,
payment of an amount equal to the dividend payable on such shares) received by
the Corporation as aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such date,
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such person or persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
7.3 No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon conversion of the Series A Preferred Stock. Instead
of any fractional interest in a share of Common Stock that would otherwise be
deliverable upon the conversion of a share of Series A Preferred Stock, the
Corporation shall pay to the holder of such share an amount in cash based upon
the Current Market Price of Common Stock on the Trading Day immediately
preceding the date of conversion. If more than one share shall be surrendered
for conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Series A Preferred Stock so surrendered.
7.4 The Conversion Price shall be adjusted from time to time as follows:
(a) If the Corporation shall after the Issue Date (A) pay a dividend or
make a distribution on its capital stock in shares of its Common Stock, (B)
subdivide its outstanding Common Stock into a greater number of shares, (C)
combine its outstanding Common Stock into a smaller number of shares or (D)
issue any shares of capital stock by reclassification of its Common Stock, the
Conversion Price in effect at the opening of business on the day next
following the date fixed for the determination of stockholders entitled to
receive such dividend or distribution or at the opening of business on the day
next following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any share of Series A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares
of Common Stock that such holder would have owned or have been entitled to
receive after the happening of any of the events described above had such
share been converted immediately prior to the record date in the case of a
dividend or distribution or the effective date in the case of a subdivision,
combination or reclassification. An adjustment made pursuant to this
subparagraph (a) shall become effective immediately after the opening of
business on the day next following the record date (except as provided in
Section 7.8 below) in the case of a dividend or distribution and shall become
effective immediately after the opening of business on the day next following
the effective date in the case of a subdivision, combination or
reclassification.
(b) If the Corporation shall issue after the Issue Date rights or warrants
(in each case, other than the Rights) to all holders of Common Stock entitling
them (for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Stock at a price per share less
than the Fair Market Value per share of Common Stock on the record date for
the determination of stockholders entitled to receive such rights or warrants,
then the Conversion Price in effect at the opening of business on the day next
following such record date shall be adjusted to equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to the
opening of business on the day next following the date fixed for such
determination by (II) a fraction, the numerator of which shall be the sum of
(A) the number of shares of
9
Common Stock outstanding on the close of business on the date fixed for such
determination and (B) the number of shares that the aggregate proceeds to the
Corporation from the exercise of such rights or warrants for Common Stock
would purchase at such Fair Market Value, and the denominator of which shall
be the sum of (A) the number of shares of Common Stock outstanding on the
close of business on the date fixed for such determination and (B) the number
of additional shares of Common Stock offered for subscription or purchase
pursuant to such rights or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following such
record date (except as provided in Section 7.8 below). In determining whether
any rights or warrants entitle the holders of Common Stock to subscribe for or
purchase shares of Common Stock at less than such Fair Market Value, there
shall be taken into account any consideration received by the Corporation upon
issuance and upon exercise of such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.
(c) If the Corporation shall distribute to all holders of its Common Stock
any shares of capital stock of the Corporation (other than Common Stock) or
evidence of its indebtedness or assets (excluding cash dividends or
distributions paid from profits or surplus of the Corporation) or rights or
warrants (in each case, other than the Rights) to subscribe for or purchase
any of its securities (excluding those rights and warrants issued to all
holders of Common Stock entitling them for a period expiring within 45 days
after the record date referred to in subparagraph (b) above to subscribe for
or purchase Common Stock, which rights and warrants are referred to in and
treated under subparagraph (b) above (any of the foregoing being hereinafter
in this subparagraph (c) called the ''Securities''), then in each such case
the Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying (I) the Conversion Price in effect immediately prior
to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by (II) a fraction, the
numerator of which shall be the Fair Market Value per share of the Common
Stock on the record date mentioned below less the then fair market value (as
determined by the Board of Directors, whose determination shall be conclusive)
of the portion of the capital stock or assets or evidences of indebtedness so
distributed or of such rights or warrants applicable to one share of Common
Stock, and the denominator of which shall be the Fair Market Value per share
of the Common Stock on the record date mentioned below. Such adjustment shall
become effective immediately at the opening of business on the Business Day
next following (except as provided in Section 7.8 below) the record date for
the determination of shareholders entitled to receive such distribution. For
the purposes of this clause (c), the distribution of a Security, which is
distributed not only to the holders of the Common Stock on the date fixed for
the determination of stockholders entitled to such distribution of such
security, but also is distributed with each share of Common Stock delivered to
a person converting a share of Series A Preferred Stock after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this clause (c); provided that on the date, if any, on which a
Person converting a share of Series A Preferred Stock would no longer be
entitled to receive such Security with a share of Common Stock (other than as
a result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred and the Conversion Price shall be
adjusted as provided in this clause (c) (and such day shall be deemed to be
''the date fixed for the determination of the stockholders entitled to receive
such distribution'' and ''the record date'' within the meaning of the two
preceding sentences).
(d) No adjustment in the Conversion Price shall be required unless such
adjustment would require a cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments that by reason of this
subparagraph (d) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made in accordance with the
provisions of this Section 7 (other than this subparagraph (d)) not later than
such time as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. Notwithstanding any
other provisions of this Section 7, the Corporation shall not be required to
make any adjustment of the Conversion Price for the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends
on securities of the Corporation. All calculations under this Section 7 shall
be made to the nearest cent (with $.005 being rounded upward) or to the
nearest 1/10 of a share (with .05 of a share being rounded upward), as the
case may be. Anything in this Section 7.4 to the contrary notwithstanding, the
Corporation shall be entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those required by this
Section 7.4, as it in its discretion shall determine to
10
be advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or warrants
to purchase stock or securities, or a distribution of other assets (other than
cash dividends) hereafter made by the Corporation to its stockholders shall
not be taxable.
7.5 If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, sale of all or substantially all of
the Corporation's assets or recapitalization of the Common Stock and excluding
any transaction as to which Section 7.4(a) applies) (each of the foregoing being
referred to herein as a ''Transaction''), in each case as a result of which
shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
share of Series A Preferred Stock which is not converted into the right to
receive stock, securities or other property in connection with such Transaction
shall thereafter be convertible into the kind and amount of shares of stock,
securities and other property (including cash or any combination thereof)
receivable upon the consummation of such Transaction by a holder of that number
of shares or fraction thereof of Common Stock into which one share of Series A
Preferred Stock was convertible immediately prior to such Transaction, assuming
such holder of Common Stock (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
(''Constituent Person''), or an affiliate of a Constituent Person and (ii)
failed to exercise his rights of election, if any, as to the kind or amount of
stock, securities and other property (including cash) receivable upon such
Transaction (provided that if the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction is not the same for
each share of Common Stock of the Corporation held immediately prior to such
Transaction by other than a Constituent Person or an affiliate thereof and in
respect of which such rights of election shall not have been exercised (''non-
electing share''), then for the purpose of this Section 7.5 the kind and amount
of stock, securities and other property (including cash) receivable upon such
Transaction by each non-electing share shall be deemed to be the kind and amount
so receivable per share by the plurality of the non-electing shares). The
Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this Section 7.5 and it shall
not consent or agree to the occurrence of any Transaction until the Corporation
has entered into an agreement with the successor or purchasing entity, as the
case may be, for the benefit of the holders of the Series A Preferred Stock that
will contain provisions enabling the holders of the Series A Preferred Stock
that remains outstanding after such Transaction to convert into the
consideration received by holders of Common Stock at the Conversion Price in
effect immediately prior to such Transaction. The provisions of this Section 7.5
shall similarly apply to successive Transactions.
7.6 If:
(a) the Corporation shall declare a dividend (or any other distribution) on
the Common Stock (other than in cash out of profits or surplus and other than
the Rights); or
(b) the Corporation shall authorize the granting to the holders of the
Common Stock of rights or warrants (other than the Rights) to subscribe for or
purchase any shares of any class or any other rights or warrants (other than
the Rights); or
(c) there shall be any reclassification of the Common Stock (other than an
event to which Section 7.4(a) applies) or any consolidation or merger to which
the Corporation is a party and for which approval of any stockholders of the
Corporation is required, or the sale or transfer of all or substantially all
of the assets of the Corporation as an entirety; or
(d) there shall occur the voluntary or involuntary liquidation, dissolution
or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of shares of the Series A Preferred Stock at
their addresses as shown on the stock records of the Corporation, as promptly as
possible, but at least 15 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights or warrants are
to be determined or (B) the date on which such reclassification,
11
consolidation, merger, sale, transfer, liquidation, dissolution or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 7.
7.7 Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be prima facie evidence of the correctness of such adjustment. Promptly after
delivery of such certificate, the Corporation shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted Conversion Price
and the effective date of such adjustment and shall mail such notice of such
adjustment of the Conversion Price to the holder of each share of Series A
Preferred Stock at such holder's last address as shown on the stock records of
the Corporation.
7.8 In any case in which Section 7.4 provides that an adjustment shall
become effective on the day next following a record date for an event, the
Corporation may defer until the occurrence of such event (A) issuing to the
holder of any share of Series A Preferred Stock converted after such record date
and before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any amount in cash in
lieu of any fraction pursuant to Section 7.3.
7.9 For purposes of this Section 7, the number of shares of Common Stock at
any time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of the Corporation. The Corporation shall not pay a
dividend or make any distribution on shares of Common Stock held in the treasury
of the Corporation.
7.10 There shall be no adjustment of the Conversion Price in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 7. If
any action or transaction would require adjustment of the Conversion Price
pursuant to more than one paragraph of this Section 7, only one adjustment shall
be made and such adjustment shall be the amount of adjustment that has the
highest absolute value.
7.11 If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 7, that in the opinion of the Board
of Directors would materially adversely affect the conversion rights of the
holders of the shares of Series A Preferred Stock, the Conversion Price for the
Series A Preferred Stock may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors may determine
to be equitable in the circumstances.
7.12 The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Series A
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series A Preferred Stock not theretofore
converted. For purposes of this Section 7.12, the number of shares of Common
Stock that shall be deliverable upon the conversion of all outstanding shares of
Series A Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the Series A Preferred Stock shall be validly issued, fully paid
and non-assessable. Before taking any action that would cause an adjustment
reducing the Conversion Price below the then-par value of the shares of Common
Stock deliverable upon conversion of the Series A Preferred Stock, the
Corporation will take any corporate action that, in the opinion of its counsel,
may be necessary in order that the Corporation may validly and legally issue
fully-paid and nonassessable shares of Common Stock at such adjusted Conversion
Price.
12
The Corporation shall endeavor to list the shares of Common Stock required to
be delivered upon conversion of the Series A Preferred Stock, prior to such
delivery, upon each national securities exchange, if any, upon which the
outstanding Common Stock is listed at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Series A Preferred Stock, the
Corporation shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
7.13 The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the Series A
Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or other securities
or property in a name other than that of the holder of the Series A Preferred
Stock to be converted and no such issue or delivery shall be made unless and
until the person requesting any issue or delivery has paid to the Corporation
the amount of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
Section 8. Ranking. Any class or series of stock of the Corporation shall
be deemed to rank:
(A) prior to the Series A Preferred Stock, as to the payment of dividends
and as to distributions of assets upon liquidation, dissolution or winding up,
if the holders of such class or series shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in preference or priority to the holders of Series A Preferred
Stock;
(B) on a parity with the Series A Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Series A Preferred Stock if the holders of such class of stock or series
and the Series A Preferred Stock shall be entitled to the receipt of dividends
and of amounts distributable upon liquidation, dissolution or winding up in
proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority one over the
other; and
(C) junior to the Series A Preferred Stock, as to the payment of dividends
or as to the distribution of assets upon liquidation, dissolution or winding
up, if such stock or series shall be Common Stock or Series C Preferred Stock
or if the holders of Series A Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up in preference or priority to the holders of shares of such stock or series.
Common Stock shall be deemed junior to the Series A Preferred Stock
notwithstanding that it may participate in distributions upon an involuntary
liquidation, dissolution or winding up without the Series A Preferred Stock
receiving the Voluntary Liquidation Preference.
Section 9. Voting.
9.1 Unless the affirmative vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of the holders of at
least 66-2/3% of all of the outstanding shares of Series A Preferred Stock and
all other affected series of Serial Preferred Stock ranking on a parity with the
Series A Preferred Stock as to dividends and amounts distributable upon
liquidation, dissolution and winding up, given in person or by proxy, either in
writing or by a vote at a meeting called for the purpose, at which the holders
of shares of Series A Preferred Stock and such other series of Serial Preferred
Stock shall vote together as a single class without regard to series, shall be
necessary for authorizing, effecting or validating the amendment, alteration or
repeal of any of the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designations, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which would materially
adversely affect the preferences, rights, powers or privileges of the Series
13
A Preferred Stock; provided, however, that the amendment of the provisions of
this Restated Certificate so as to authorize or create, or to increase the
authorized amount of, any Junior Stock or any shares of any class ranking on a
parity with the Series A Preferred Stock shall not be deemed to materially
adversely affect the preferences, rights, powers or privileges of Series A
Preferred Stock; and provided, further, that the amendment of the provisions of
the Restated Certificate of Incorporation so as to increase or eliminate the
Aggregate Involuntary Liquidation Amount shall not be deemed to materially
adversely affect the preferences, rights, powers or privileges of Series A
Preferred Stock.
9.2 Unless the affirmative vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of the holders of at
least 66-2/3% of all of the outstanding shares of Series A Preferred Stock and
all other series of Serial Preferred Stock ranking on a parity with the Series A
Preferred Stock as to dividends and amounts distributable upon liquidation,
dissolution or winding up, given in person or by proxy, either in writing or by
a vote at a meeting called for the purpose at which the holders of shares of
Series A Preferred Stock and such other series of Serial Preferred Stock shall
vote together as a single class without regard to series, shall be necessary for
authorizing, effecting or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the Series A
Preferred Stock as to dividends or upon liquidation, dissolution or winding up,
or the reclassification of any authorized stock of the Corporation into any such
prior shares, or the creation, authorization or issuance of any obligation or
security convertible into or evidencing the right to purchase any such prior
shares.
9.3 If at the time of any annual meeting of stockholders for the election of
directors a default in preference dividends (as defined below) on the Series A
Preferred Stock and any other series of Serial Preferred Stock with respect to
which such a default exists shall exist, the number of directors constituting
the Board of Directors of the Corporation shall be increased by two, and the
holders of the Series A Preferred Stock and such other series shall have the
right at such meeting, voting together as a single class without regard to
series, to the exclusion of the holders of common stock, to elect two directors
of the Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon the Serial Preferred
Stock. Any Preferred Director may be removed by, and shall not be removed except
by, the vote of the holders of record of the outstanding shares of Serial
Preferred Stock, voting together as a single class without regard to series, at
a meeting of the stockholders, or of the holders of shares of Serial Preferred
Stock as to which a default exists, called for the purpose. So long as a default
in any preference dividends on the Serial Preferred Stock shall exist, (a) any
vacancy in the office of a Preferred Director may be filled (except as provided
in the following clause (b)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (b) in the case of the
removal of any Preferred Director, the vacancy may be filled by the vote of the
holders of the outstanding shares of Serial Preferred Stock as to which a
default exists, voting together as a single class without regard to series, at
the same meeting at which such removal shall be voted. Each director appointed
as aforesaid by the remaining Preferred Director shall be deemed, for all
purposes hereof, to be a Preferred Director. Whenever a default in preference
dividends shall no longer exist, the term of office of each Preferred Director
shall terminate and the number of directors constituting the Board of Directors
of the Corporation shall be reduced by two. For the purposes hereof, a ''default
in preference dividends'' on any series of Serial Preferred Stock shall be
deemed to exist whenever the equivalent of six quarterly dividends have not been
declared and paid or set apart for payment, whether or not consecutive, and,
having so occurred, such default shall be deemed to exist thereafter until, but
only until, all accrued dividends on all shares of Serial Preferred Stock of
each and every series then outstanding shall have been declared and paid or set
apart for payment to the end of the last preceding dividend period.
For purposes of the foregoing provisions of this Section 9, each share of
Series A Preferred Stock shall have one (1) vote per share. Except as otherwise
required by applicable law or as set forth herein, the shares of Series A
Preferred Stock shall not have any relative, participating, optional or other
special voting rights and powers and the consent of the holders thereof shall
not be required for the taking of any corporate action.
Section 10. Record Holders. The Corporation and the Transfer Agent may
deem and treat the record holder of any shares of Series A Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Corporation
nor the Transfer Agent shall be affected by any notice to the contrary.
14
B. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B PREFERRED STOCK
Unless otherwise indicated, any reference in this Article FOURTH, Part I.B to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part I.B.
Section 1. Number of Shares and Designations. Fifty thousand (50,000)
shares of the Serial Preferred Stock, without par value, of the Corporation are
hereby constituted as a series designated as Series B Preferred Stock (the
''Series B Preferred Stock'').
Section 2. Definitions. For purposes of the Series B Preferred Stock, the
following terms shall have the meanings indicated:
2.1 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee of such board of directors authorized to perform
any of its responsibilities with respect to the Series B Preferred Stock.
2.2 ''Business Day'' shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
2.3 ''Common Stock'' shall mean the common stock of the Corporation, par
value $0.01 per share.
2.4 ''default in preference dividends'' shall have the meaning set forth in
Section 8.3 hereof.
2.5 ''Dividend Payment Date'' shall mean February 1, May 1, August 1 and
November 1 in each year, commencing on August 1, 1994; provided that if any
Dividend Payment Date falls on any day other than a Business Day, the dividend
payment due on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date.
2.6 ''Dividend Periods'' shall mean quarterly dividend periods commencing on
February 1, May 1, August 1 and November 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on the Issue Date
and end on and include July 31, 1994.)
2.7 ''Issue Date'' shall mean the first date on which shares of Series B
Preferred Stock are issued.
2.8 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.9 ''Preferred Director'' shall mean any director of the Corporation
elected or appointed pursuant to Section 8.3 hereof.
2.10 ''Redemption Date'' shall have the meaning set forth in Section 5.3
hereof.
2.11 ''Restated Certificate'' shall mean this Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.12 ''Rights'' shall mean the rights of the Corporation that are issuable
under the Corporation's Rights Agreement dated as of December 11, 1986, and as
amended from time to time, or rights to purchase any capital stock of the
Corporation under any successor shareholder rights plan or plans adopted in
replacement of the Corporation's Rights Agreement.
15
2.13 ''set apart for payment'' shall be deemed to include, without any
action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry that indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided that if any funds for any class or
series of stock ranking on a parity with or junior to the Series B Preferred
Stock as to the payment of dividends are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar agent, then
''set apart for payment'' with respect to the Series B Preferred Stock shall
mean placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
2.14 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated by the Board of Directors as the transfer agent
for the Series B Preferred Stock.
Section 3. Dividends.
3.1 The holders of shares of the Series B Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of assets
legally available for that purpose, dividends payable in cash at the rate per
annum of $3,062.50 per share of Series B Preferred Stock. Such dividends shall
be cumulative from the Issue Date, whether or not in any Dividend Period or
Periods there shall be assets of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly, when, as and if
declared by the Board of Directors, in arrears on Dividend Payment Dates,
commencing on August 1, 1994. Each such dividend shall be payable in arrears to
the holders of record of shares of the Series B Preferred Stock, as they appear
on the stock records of the Corporation at the close of business on such record
dates, which shall not be more than 60 days nor less than 10 days preceding the
payment dates thereof, as shall be fixed by the Board of Directors or a duly
authorized committee thereof. Accrued and unpaid dividends for any past Dividend
Periods may be declared and paid at any time, without reference to any Dividend
Payment Date, to holders of record on such date, not exceeding 45 days preceding
the payment date thereof, as may be fixed by the Board of Directors.
3.2 The amount of dividends payable for each full Dividend Period for the
Series B Preferred Stock shall be computed by dividing the annual dividend rate
by four. The amount of dividends payable for the initial Dividend Period, or any
other period shorter or longer than a full Dividend Period, on the Series B
Preferred Stock shall be computed on the basis of twelve-30-day months and a
360-day year. Holders of shares of Series B Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of cumulative dividends, as herein provided, on the Series B Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series B Preferred Stock that may be in
arrears.
3.3 So long as any shares of the Series B Preferred Stock are outstanding,
no dividends, except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on any class or series of stock of the
Corporation ranking, as to dividends and amounts distributable upon liquidation,
dissolution or winding up, on a parity with the Series B Preferred Stock, for
any period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series B Preferred Stock for all Dividend Periods
terminating on or prior to the date of payment of the dividend on such class or
series of parity stock. When dividends are not paid in full or a sum sufficient
for such payment is not set apart, as aforesaid, all dividends declared upon
shares of the Series B Preferred Stock and all dividends declared upon any other
class or series of stock ranking on a parity as to dividends and amounts
distributable upon liquidation, dissolution or winding up shall be declared
ratably in proportion to the respective amounts of dividends accumulated and
unpaid on the Series B Preferred Stock and accumulated and unpaid on such parity
stock.
3.4 So long as any shares of the Series B Preferred Stock are outstanding,
no dividends (other than (i) the Rights and (ii) dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for or purchase shares
of, any class or series of stock of the Corporation that is junior to the Series
B Preferred Stock as to the payment of dividends and as to distributions upon
liquidation, dissolution or winding up of the Corporation) shall be declared or
paid or set apart for payment or other distribution declared or made upon any
class or series of stock of the Corporation that is junior to the Series B
Preferred Stock as to the payment of dividends, nor shall any
16
class or series of stock of the Corporation ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up, on a parity with or
junior to the Series B Preferred Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of shares of
Common Stock made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation, directly or indirectly (except by conversion
into or exchange for any class or series of stock of the Corporation that is
junior to the Series B Preferred Stock as to payment of dividends and as to
distributions upon liquidation, dissolution or winding-up of the Corporation),
unless in each case the full cumulative dividends on all outstanding shares of
the Series B Preferred Stock and any other stock of the Corporation ranking on a
parity with the Series B Preferred Stock, as to dividends and amounts
distributable upon liquidation, dissolution or winding up shall have been paid
or set apart for payment for all past Dividend Periods with respect to the
Series B Preferred Stock and all past dividend periods with respect to such
parity stock.
Section 4. Payments upon Liquidation.
4.1 In the event of any liquidation, dissolution or winding up of the
Corporation before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
any class or series of stock of the Corporation that ranks junior to the Series
B Preferred Stock as to the receipt of amounts distributable upon liquidation,
dissolution or winding up of the Corporation, the holders of the shares of
Series B Preferred Stock shall be entitled to receive Twenty-Five Thousand
Dollars ($25,000) per share of Series B Preferred Stock plus an amount equal to
all dividends (whether or not earned or declared) accrued and unpaid thereon to
the date of final distribution to such holders (the ''Liquidation Preference'');
but such holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of the shares
of Series B Preferred Stock shall be insufficient to pay in full the Liquidation
Preference and the liquidation preference on all other shares of any class or
series of stock ranking, as to dividends and amounts distributable upon
liquidation, dissolution or winding up, on a parity with the Series B Preferred
Stock, then such assets, or the proceeds thereof, shall be distributed among the
holders of shares of Series B Preferred Stock and any such other parity stock
ratably in accordance with the respective amounts that would be payable on such
shares of Series B Preferred Stock and any such other parity stock if all
amounts payable thereon were paid in full. For the purposes of this Section 4,
neither (i) a consolidation or merger of the Corporation with or into one or
more corporations nor (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets shall be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class or
classes of stock ranking on a parity with or prior to the Series B Preferred
Stock as to dividends and amounts distributable upon liquidation, dissolution or
winding up of the Corporation, after payment shall have been made to the holders
of the Series B Preferred Stock, as and to the fullest extent provided in this
Section 4, any other class or series of stock of the Corporation that ranks
junior to the Series B Preferred Stock as to amounts distributable upon
dissolution, liquidation or winding up of the Corporation shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series B Preferred Stock shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
5.1 The shares of Series B Preferred Stock shall be redeemable at the option
of the Corporation by resolution of its Board of Directors, in whole, or, from
time to time, in part, at any time on or after July 12, 2004, at the redemption
price of $25,000.00 per share plus all dividends accrued and unpaid on the
shares of Series B Preferred Stock up to the date fixed for the redemption, upon
giving notice as provided herein below.
5.2 If fewer than all of the outstanding shares of Series B Preferred Stock
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board of Directors and the shares to be redeemed shall be determined pro
rata or by lot or in such other manner and subject to such regulations as the
Board of Directors in its sole discretion shall prescribe.
17
5.3 At least 30 days, but not more than 60 days, prior to the date fixed for
the redemption of shares of Series B Preferred Stock, a written notice shall be
mailed in a postage prepaid envelope to each holder of record of the shares of
Series B Preferred Stock to be redeemed, addressed to such holder at his post
office address as shown on the records of the Corporation, notifying such holder
of the election of the Corporation to redeem such shares, stating the date fixed
for redemption thereof (the ''Redemption Date'') and calling upon such holder to
surrender to the Corporation, on the Redemption Date at the place designated in
such notice, the certificate or certificates representing the number of shares
specified in such notice of redemption. On or after the Redemption Date, each
holder of shares of Series B Preferred Stock to be redeemed shall present and
surrender such certificate or certificates for such shares to the Corporation at
the place designated in such notice and thereupon the redemption price of such
shares shall be paid to or on the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In case less than all the shares represented by
any such certificate are redeemed, a new certificate shall be issued
representing the shares not redeemed.
From and after the Redemption Date (unless default shall be made by the
Corporation in payment of the redemption price), all dividends on the shares of
Series B Preferred Stock designated for redemption in such notice shall cease to
accrue, and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price of such shares
(including all accrued and unpaid dividends up to the Redemption Date) upon the
surrender of certificates representing the same, shall cease and terminate and
such shares shall not thereafter be transferred (except with the consent of the
Corporation) on the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever. At its election, the
Corporation, prior to the Redemption Date, may deposit the redemption price
(including all accrued and unpaid dividends up to the Redemption Date) of shares
of Series B Preferred Stock called for redemption in trust for the holders
thereof with a bank or trust company (having a capital surplus and undivided
profits aggregating not less than $50,000,000) in the Borough of Manhattan, City
and State of New York, or in any other city in which the Corporation at the time
shall maintain a transfer agency with respect to such shares, in which case the
aforesaid notice to holders of shares of Series B Preferred Stock to be redeemed
shall state the date of such deposit, shall specify the office of such bank or
trust company as the place of payment of the redemption price, and shall call
upon such holders to surrender the certificates representing such shares at such
place on or after the date fixed in such redemption notice (which shall not be
later than the Redemption Date). Any interest accrued on such funds shall be
paid to the Corporation from time to time. Any moneys so deposited that shall
remain unclaimed by the holders of such shares of Series B Preferred Stock at
the end of two years after the Redemption Date shall be returned by such bank or
trust company to the Corporation.
Section 6. Shares to be Retired.
All shares of Series B Preferred Stock that have been issued and reacquired in
any manner by the Corporation (excluding, until the Corporation elects to retire
them, shares that are held as treasury shares) shall be restored to the status
of authorized but unissued shares of Serial Preferred Stock, without designation
as to series.
Section 7. Ranking.
7.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Series B Preferred Stock, as to the payment of dividends
and as to distributions of assets upon liquidation, dissolution or winding up,
if the holders of such class or series shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in preference or priority to the holders of Series B Preferred
Stock;
(b) on a parity with the Series B Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Series B Preferred Stock, if the holders of such class of stock or series
and the Series B Preferred Stock shall be entitled to the receipt of
18
dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or priority
one over the other; and
(c) junior to the Series B Preferred Stock, as to the payment of dividends
or as to the distribution of assets upon liquidation, dissolution or winding
up, if the holders of Series B Preferred Stock shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up in preference or priority to the holders of shares of such class
or series.
7.2 The Series A Convertible Preferred Stock and the Series D Redeemable
Preferred Stock shall each be deemed to rank on a parity with the Series B
Preferred Stock. The Class 1 ESOP Convertible Preferred Stock, the Class 2 ESOP
Convertible Preferred Stock, the Class M ESOP Voting Junior Preferred Stock, the
Class P ESOP Voting Junior Preferred Stock, the Class S ESOP Voting Junior
Preferred Stock, the Class I Junior Preferred Stock, the Class IAM Junior
Preferred Stock, the Class Pilot MEC Junior Preferred Stock, the Class SAM
Junior Preferred Stock, the Series C Junior Participating Preferred Stock and
the Common Stock shall each be deemed to rank junior to the Series B Preferred
Stock as to receipt of dividends and as to amounts distributable upon
liquidation, dissolution or winding up.
Section 8. Voting.
8.1 Unless the affirmative vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of the holders of at
least 66-2/3% of all of the outstanding shares of Series B Preferred Stock,
given in person or by proxy, either in writing or by a vote at a meeting called
for the purpose shall be necessary for authorizing, effecting or validating the
amendment, alteration or repeal of any of the provisions of this Restated
Certificate or of any certificate amendatory thereof or supplemental thereto
(including any Certificate of Designations, Preferences and Rights or any
similar document relating to any series of Serial Preferred Stock) that would
materially adversely affect the preferences, rights, powers or privileges of the
Series B Preferred Stock; provided that the amendment of the provisions of this
Restated Certificate so as to authorize or create, or to increase the authorized
amount of, any shares of any class or series ranking on a parity with or junior
to the Series B Preferred Stock shall not be deemed to materially adversely
affect the preferences, rights, powers or privileges of Series B Preferred
Stock.
8.2 Unless the affirmative vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of the holders of at
least 66-2/3% of all of the outstanding shares of Series B Preferred Stock,
given in person or by proxy, either in writing or by a vote at a meeting called
for the purpose shall be necessary for authorizing, effecting or validating the
creation, authorization or issue of any shares of any class or series of stock
of the Corporation ranking prior to the Series B Preferred Stock as to dividends
or upon liquidation, dissolution or winding up, or the reclassification of any
authorized stock of the Corporation into any such prior shares, or the creation,
authorization or issuance of any obligation or security convertible into or
evidencing the right to purchase any such prior shares.
8.3 If at the time of any annual meeting of stockholders for the election of
directors a default in preference dividends (as defined below) on the Series B
Preferred Stock and any other series of Serial Preferred Stock with respect to
which such a default exists shall exist, then (without duplication of the
provisions of Article FOURTH, Part 1.A, Section 9.3 of this Restated
Certificate) the number of directors constituting the Board of Directors of the
Corporation shall be increased by two, and the holders of the Series B Preferred
Stock and such other series shall have the right at such meeting, voting
together as a single class without regard to series, to the exclusion of the
holders of common stock, to elect two directors of the Corporation to fill such
newly created directorships. Such right shall continue until there are no
dividends in arrears upon the Serial Preferred Stock. Any Preferred Director may
be removed by, and shall not be removed except by, the vote of the holders of
record of the outstanding shares of Serial Preferred Stock, voting together as a
single class without regard to series, at a meeting of the stockholders, or of
the holders of shares of Serial Preferred Stock as to which a default exists,
called for the purpose. So long as a default in any preference dividends on the
Serial Preferred Stock shall exist, (a) any vacancy in the office of a
19
Preferred Director may be filled (except as provided in the following clause
(b)) by an instrument in writing signed by the remaining Preferred Director and
filed with the Corporation and (b) in the case of the removal of any Preferred
Director, the vacancy may be filled by the vote of the holders of the
outstanding shares of Serial Preferred Stock as to which a default exist, voting
together as a single class without regard to series, at the same meeting at
which such removal shall be voted. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes hereof, to be a
Preferred Director. Whenever a default in preference dividends shall no longer
exist, the term of office of each Preferred Director shall terminate and the
number of directors constituting the Board of Directors of the Corporation shall
be reduced by two. For the purposes hereof, a ''default in preference
dividends'' on any series of Serial Preferred Stock shall be deemed to exist
whenever the equivalent of six quarterly dividends have not been declared and
paid or set apart for payment, whether or not consecutive, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all shares of Serial Preferred Stock of each and
every series then outstanding shall have been declared and paid or set apart for
payment to the end of the last preceding dividend period.
8.4 For purposes of the foregoing provisions of this Section 8, each share
of Series B Preferred Stock shall have one thousand (1,000) votes per share.
Except as otherwise required by applicable law or as set forth herein, the
shares of Series B Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers and the consent of the
holders thereof shall not be required for the taking of any corporate action.
Section 9. Record Holders. The Corporation and the Transfer Agent may deem
and treat the record holder of any shares of Series B Preferred Stock as the
true and lawful owner thereof for all purposes, and neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
C. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C JUNIOR PARTICIPATING
PREFERRED STOCK
Unless otherwise indicated, any reference in this Article FOURTH, Part I.C to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part I.C.
Section 1. Designation and Amount. The shares of such series shall be
designated as ''Series C Junior Participating Preferred Stock'' (the ''Series C
Preferred Stock'') and the number of shares constituting such series shall be
1,250,000.
Section 2. Dividends and Distributions. The holders of shares of Series C
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the fifteenth day of January, April, July and
October in each year (each such date being referred to herein as a ''Quarterly
Dividend Payment Date''), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series C
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $10 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, par
value $0.01 per share, of the Corporation (the ''Common Stock'') since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series C Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series C Preferred Stock then outstanding were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares
20
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
The Corporation shall declare a dividend or distribution on the Series C
Preferred Stock as provided in this Section 2 immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $10.00 per share on the Series C Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
Dividends shall begin to accrue and be cumulative on outstanding shares of
Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares of Series C Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series C Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series C Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series C Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the date fixed
for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series C Preferred Stock
shall have the following voting rights:
3.1 Subject to the provision for adjustment hereinafter set forth, each
share of Series C Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series C
Preferred Stock then outstanding were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
3.2 Except as otherwise provided herein or by law, the holders of shares of
Series C Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
3.3 If the equivalent of six quarterly dividends payable on the Series C
Preferred Stock or any other series of Serial Preferred Stock of the Corporation
are in default, the number of directors of the Corporation shall be increased by
two and the holders of all such series in respect of which such a default
exists, voting as a class without regard to series, will be entitled to elect
two additional directors at the next annual meeting and each subsequent meeting,
until all cumulative dividends have been paid in full or until noncumulative
dividends have been paid regularly for at least one year.
3.4 Except as set forth herein, holders of Series C Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
21
Section 4. Certain Restrictions.
4.1 Whenever quarterly dividends or other dividends or distributions payable
on the Series C Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series C Preferred Stock outstanding shall have
been paid in full, the Corporation shall not
(a) declare or pay dividends on, make any other distributions on, or redeem
or purchase or otherwise acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series C Preferred Stock;
(b) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Preferred Stock,
except dividends paid ratably on the Series C Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(c) redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior as to dividends and as to distributions upon
dissolution, liquidation or winding up to the Series C Preferred Stock; or
(d) purchase or otherwise acquire for consideration any shares of Series C
Preferred Stock, or any shares of stock ranking on a parity with the Series C
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights and preferences
of the respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or classes.
4.2 The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Section 4.1, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series C Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Serial Preferred Stock and may be reissued as part of a new series of the Serial
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. Subject to (a) the
rights of the holders of preferred stock of the Corporation ranking senior to
the Series C Preferred Stock as to dividends and amounts payable upon any
voluntary or involuntary liquidation, dissolution or winding up and (b) any
other provision of the Restated Certificate of Incorporation of the Corporation
(as amended from time to time, the ''Restated Certificate''), upon any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon any voluntary or involuntary liquidation,
dissolution or winding up) to the Series C Preferred Stock unless, prior
thereto, the holders of shares of the Series C Preferred Stock shall have
received $100.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series C Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon any voluntary or involuntary
liquidation,
22
dissolution or winding up) with the Series C Preferred Stock, except
distributions made ratably on the Series C Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such voluntary or involuntary liquidation, dissolution
or winding up. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series C
Preferred Stock then outstanding were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series C Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series C Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series C Preferred Stock shall not
be redeemable.
Section 9. Ranking. The Series C Preferred Stock shall rank junior to all
other series of the Corporation's preferred stock, whether now or hereafter
outstanding, as to dividends and amounts payable upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series C Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series C Preferred Stock, voting together as a single
class.
D. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D REDEEMABLE PREFERRED STOCK
Unless otherwise indicated, any reference in this Article FOURTH, Part I.D to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part I.D.
Section 1. Number of Shares and Designations.
Fifty thousand (50,000) shares of the Serial Preferred Stock, without par
value, of the Corporation are hereby constituted as a series designated as
Series D Redeemable Preferred Stock (the ''Series D Preferred Stock'').
Section 2. Definitions. For purposes of the Series D Preferred Stock, the
following terms shall have the meanings indicated:
23
2.1 ''Common Stock'' shall mean the common stock of the Corporation, par
value $0.01 per share.
2.2 ''Redemption Consideration'' shall mean (subject to Section 6 hereof)
$84.81 in cash, such Redemption Consideration to be distributed by the
Corporation in respect of each 1/1,000th of a share of Series D Preferred Stock
to the holder thereof upon the redemption of such fraction of a share as
provided in Section 6 hereof and as adjusted as provided in Section 6 hereof.
2.3 ''Series D Preferred Stock'' shall have the meaning set forth in Section
1 hereof.
2.4 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated by the Board of Directors of the Corporation
(or any committee of such board of directors authorized to perform any of its
responsibilities with respect to the Series D Preferred Stock) as the transfer
agent for the Series D Preferred Stock.
Section 3. Dividends. The holders of shares of the Series D Preferred
Stock or fractions thereof shall not be entitled to receive any dividends.
Section 4. Payments upon Liquidation.
4.1 In the event of any liquidation, dissolution or winding up of the
Corporation before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
any class or series of stock of the Corporation that ranks junior to the Series
D Preferred Stock as to amounts distributable upon liquidation, dissolution or
winding up of the Corporation, the holders of the shares of Series D Preferred
Stock or fractions thereof shall be entitled to receive the Redemption
Consideration per 1/1,000th of a share of Series D Preferred Stock (the
''Liquidation Preference''); but such holders shall not be entitled to any
further payment. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of the shares of Series D Preferred Stock and fractions
thereof shall be insufficient to pay in full the Liquidation Preference, and the
liquidation preference on all other shares of any class or series of stock
ranking, as to dividends and amounts distributable upon liquidation, dissolution
or winding up, on a parity with the Series D Preferred Stock, then such assets,
or the proceeds thereof, shall be distributed among the holders of shares of
Series D Preferred Stock or fractions thereof and any such other parity stock
ratably in accordance with the respective amounts that would be payable on such
shares of Series D Preferred Stock or fractions thereof and any such other
parity stock if all amounts payable thereon were paid in full. For the purposes
of this Section 4, neither (i) a consolidation or merger of the Corporation with
or into one or more corporations nor (ii) a sale, lease, exchange or transfer of
all or substantially all of the Corporation's assets shall be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class or
classes of stock ranking on a parity with or prior to the Series D Preferred
Stock as to amounts distributable upon liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the holders of the Series
D Preferred Stock, as and to the fullest extent provided in this Section 4, any
other series or class or classes of stock of the Corporation that ranks junior
to the Series D Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up of the Corporation, shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the Series D
Preferred Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. All shares of Series D Preferred Stock
and fractions thereof that shall have been issued and reacquired in any manner
by the Corporation (excluding, until the Corporation elects to retire them,
shares that are held as treasury shares) shall be restored to the status of
authorized but unissued shares of Serial Preferred Stock, without designation as
to series.
Section 6. Redemption. Each 1/1,000th of a share of Series D Preferred
Stock is redeemable, and immediately following the issuance thereof, the
Corporation, to the extent that it may legally do so and subject to the other
provisions of this Restated Certificate, shall redeem each 1/1,000th of a share
of Series D Preferred Stock,
24
for the Redemption Consideration. If for any reason the Corporation is not able
to redeem any portion of the Series D Preferred Stock so issued, such shares and
fractions thereof that remain outstanding shall continue to exist and remain
outstanding and shall thereafter represent the right to receive the Redemption
Consideration as soon as the Corporation is legally and hereunder permitted to
redeem such shares and fractions thereof.
At the time of the redemption pursuant to this Section 6, the rights of
holders of Series D Preferred Stock so redeemed shall cease with respect to such
shares or fractions thereof (except the right to receive cash as provided
above), and the person entitled to receive the cash upon redemption shall be
treated for all purposes as the owner of such cash as of the date of such
redemption.
With respect to any shares of the Series D Preferred Stock or fractions
thereof that are redeemed by the Corporation immediately following the issuance
thereof, the Corporation need not distribute a certificate to the person
otherwise entitled to receive such shares or fractions thereof but may instead
distribute the Redemption Consideration to such person or persons directly. If
certificates representing shares of the Series
D Preferred Stock or fractions thereof are issued, the Corporation may require
the surrender of such certificates as a condition precedent to the issuance of
the Redemption Consideration.
Section 7. Ranking.
7.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Series D Preferred Stock, as to distributions of assets
upon liquidation, dissolution or winding up, if the holders of such class or
series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of Series D Preferred Stock;
(b) on a parity with the Series D Preferred Stock, as to distribution of
assets upon liquidation, dissolution or winding up, whether or not the
redemption or liquidation prices per share thereof be different from those of
the Series D Preferred Stock, if the holders of such class of stock or series
and the Series D Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective liquidation preferences, without preference or priority one
over the other; and
(c) junior to the Series D Preferred Stock, as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of Series D
Preferred Stock shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of shares of such class or series.
7.2 The Series A Convertible Preferred Stock and the Series B Preferred
Stock shall each be deemed to rank on a parity with the Series D Preferred Stock
as to amounts distributable upon liquidation, dissolution or winding up. The
Class 1 ESOP Convertible Preferred Stock, the Class 2 ESOP Convertible Preferred
Stock, the Class M ESOP Voting Junior Preferred Stock, the Class P ESOP Voting
Junior Preferred Stock, the Class S ESOP Voting Junior Preferred Stock, the
Class I Junior Preferred Stock, the Class IAM Junior Preferred Stock, the Class
Pilot MEC Junior Preferred Stock, the Class SAM Junior Preferred Stock, the
Series C Junior Participating Preferred Stock and the Common Stock shall each be
deemed to rank junior to the Series D Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
Section 8. Voting. Except as otherwise required by applicable law, the
shares of Series D Preferred Stock shall not have any voting rights and the
consent of the holders thereof shall not be required for the taking of any
corporate action. For each matter as to which shares of the Series D Preferred
Stock shall have voting rights, each share of Series D Preferred Stock shall
have one (1) vote per share.
Section 9. Record Holders. The Corporation and the Transfer Agent may deem
and treat the record holder of any shares of Series D Preferred Stock as the
true and lawful owner thereof for all purposes, and except as otherwise provided
by law, neither the Corporation nor the Transfer Agent shall be affected by any
notice to the contrary.
25
PART II
Class 1 ESOP Convertible Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part II to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part II.
Section 1. Number of Shares; Designation; Issuance and Automatic Conversion.
1.1 The Class 1 ESOP Convertible Preferred Stock of the Corporation (the
''Class 1 ESOP Preferred Stock'') shall consist of 25,000,000 shares, par value
$0.01 per share.
1.2 Shares of Class 1 ESOP Preferred Stock shall be issued only to a trustee
or trustees acting on behalf of the UAL Corporation Employee Stock Ownership
Plan (the ''ESOP''). In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other realization upon
shares of Class 1 ESOP Preferred Stock pledged as security for any loan or loans
made to the ESOP or to the trustee or the trustees acting on behalf of the ESOP)
(hereinafter a ''transfer'') of shares of Class 1 ESOP Preferred Stock to any
person (including, without limitation, any participant in the ESOP) other than
(x) any trustee or trustees of the ESOP or (y) any pledgee of such shares
acquiring such shares as security for any loan or loans made to the ESOP or to
any trustee or trustees acting on behalf of the ESOP, the shares of Class 1 ESOP
Preferred Stock so transferred, upon such transfer and without any further
action by the Corporation or the transferee, shall be automatically converted
into shares of Common Stock at the applicable Conversion Rate in accordance with
Section 6 hereof and thereafter such transferee shall not have any of the voting
powers, preferences or relative, participating, optional or special rights
ascribed to shares of Class 1 ESOP Preferred Stock hereunder, but, rather, shall
have only the powers and rights pertaining to the Common Stock into which such
shares of Class 1 ESOP Preferred Stock shall have been so converted. In the
event of any such automatic conversion provided for in this Section 1.2, such
transferee shall be treated for all purposes as the record holder of the shares
of Common Stock into which the Class 1 ESOP Preferred Stock shall have been
converted as of the date of such conversion. Certificates representing shares of
Class 1 ESOP Preferred Stock shall be legended to reflect such consequences of a
transfer. Notwithstanding the foregoing provisions of this Section 1, shares of
Class 1 ESOP Preferred Stock may be converted into shares of Common Stock as
provided by Section 6 hereof and the shares of Common Stock issued upon any
conversion in accordance with Section 6 hereof or this Section 1.2 may be
transferred by the holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class 1 ESOP Preferred Stock,
the following terms shall have the meanings indicated:
2.1 ''Affiliate'' shall have the meaning defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended, or any successor thereto.
2.2 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee autho-rized by such board of directors to perform
any of its responsibilities with respect to the Class 1 ESOP Preferred Stock.
2.3 ''Business Day'' shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
2.4 ''Class 1 ESOP Preferred Stock'' shall have the meaning set forth in
Section 1 hereof.
2.5 ''Class 2 ESOP Preferred Stock'' shall mean the Class 2 ESOP Convertible
Preferred Stock, par value $0.01 per share, of the Corporation.
26
2.6 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.7 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.9 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.13 ''Code'' shall mean the Internal Revenue Code of 1986, as amended from
time to time.
2.14 ''Common Stock'' shall mean the common stock of the Corporation, par
value $0.01 per share.
2.15 ''Conversion Rate'' shall have the meaning set forth in Section 6.1
hereof.
2.16 ''Current Market Price'' of publicly traded shares of Common Stock or
any other class or series of capital stock or other security of the Corporation
or any other issuer for any day shall mean the last reported sales price,
regular way, on such day, or, if no sale takes place on such day, the average of
the reported closing bid and asked prices on such day, regular way, in either
case as reported on the New York Stock Exchange Composite Tape or, if such
security is not listed or admitted for trading on the New York Stock Exchange,
Inc. (''NYSE''), on the principal national securities exchange on which such
security is listed or admitted for trading or quoted or, if not listed or
admitted for trading or quoted on any national securities exchange, on the
Nasdaq National Market, or, if such security is not quoted on such National
Market, the average of the closing bid and asked prices on such day in the over-
the-counter market as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System (''NASDAQ'') or, if bid and asked
prices for such security on such day shall not have been reported through
NASDAQ, the average of the bid and asked prices on such day as furnished by any
NYSE member firm regularly making a market in such security selected for such
purpose by the Board of Directors.
2.17 ''Director Preferred Stocks'' shall mean collectively, the Class I
Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred
Stock and the Class SAM Preferred Stock.
2.18 ''Dividend Payment Date'' shall mean the penultimate Business Day in
each year, commencing on such penultimate Business Day in 1994; provided that,
with respect to the Dividend Period beginning on January 1, 2000 and ending on
March 31, 2000, the Dividend Payment Date shall be the penultimate Business Day
in the calendar quarter ending March 31, 2000.
2.19 ''Dividend Periods'' shall mean annual dividend periods commencing on
the last Business Day of each year and ending on and including the penultimate
Business Day of the next succeeding year (other than the initial Dividend
Period, which shall commence on the Issue Date and end on and include the
penultimate Business Day in 1994, the Dividend Period commencing on the last
Business Day of 1999, which shall commence on such date and end on the
penultimate Business Day in the calendar quarter ending March 31, 2000 and the
Dividend Period
27
commencing on the last Business Day of the calendar quarter ending on March 31,
2000, which shall commence on such date and end on the penultimate Business Day
in the year 2000).
2.20 ''Equity Securities'' shall mean the Common Stock or any debt, equity
or other security or contractual right convertible into or exercisable or
exchangeable for, or based on the value of, the Common Stock or any warrants,
options or other rights to purchase the Common Stock or other Equity Securities
(other than the Rights).
2.21 ''ESOP Preferred Stocks'' shall mean, collectively, the Class 1 ESOP
Preferred Stock and the Class 2 ESOP Preferred Stock.
2.22 ''Extraordinary Distribution'' shall mean any single dividend or other
distribution (including by reclassification of shares or recapitalization of the
Corporation, as well as any such dividend or distribution made in connection
with a merger or consolidation in which the Corporation is the continuing
corporation and the Common Stock is not changed or exchanged) to holders of
Common Stock (effected while any of the shares of Class 1 ESOP Preferred Stock
are outstanding) (i) of cash, where the aggregate amount of such single cash
dividend or distribution together with the amount of all cash dividends and
distributions made to holders of Common Stock during the period from the latest
to occur of the Issue Date or the most recent Dividend Payment Date until the
payment date for such cash dividend or distribution to holders of Common Stock,
when combined with the aggregate amount of all previous Pro Rata Repurchases
during such period (for this purpose, including only that portion of the
aggregate purchase price of each such Pro Rata Repurchase which is in excess of
the Fair Market Value of the Common Stock repurchased as determined on the
Business Day prior to the public announcement of such Pro Rata Repurchase made
during such period), exceeds twelve and one-half percent (12-1/2%) of the
aggregate Fair Market Value of all shares of Common Stock outstanding on the
record date for determining the shareholders entitled to receive such
Extraordinary Distribution and (ii) of any shares of capital stock of the
Corporation (other than shares of Common Stock), other securities of the
Corporation (other than securities of the type referred to in Sections 6.4(b)
and 6.4(c) hereof), evidences of indebtedness of the Corporation or any other
person or any other property (including, without limitation, shares of capital
stock of any subsidiary of the Corporation), or any combination thereof. The
Fair Market Value of any such single dividend or other distribution that,
pursuant to clause (i), constitutes an Extraordinary Distribution shall for
purposes of the first paragraph of Section 6.4(d) hereof be the sum of the Fair
Market Value of such Extraordinary Distribution plus the amount of any other
cash dividends and distributions made within the relevant period referred to
above to holders of Common Stock to the extent such other dividends and
distributions were not previously included in the calculation of an adjustment
pursuant to the first paragraph of Section 6.4(d) hereof within such period.
2.23 ''Fair Market Value'' shall mean the average of the daily Current
Market Prices of the security in question during the five (5) consecutive
Trading Days before the earlier of the day in question and the ''ex'' date with
respect to the issuance or distribution requiring such computation. The term
'''ex' date,'' when used with respect to any issuance or distribution, means the
first day on which the Common Stock trades regular way, without the right to
receive such issuance or distribution, on the exchange or in the market, as the
case may be, used to determine that day's Current Market Price. With respect to
any asset or security for which there is no Current Market Price, the Fair
Market Value of such asset or security shall be determined in good faith by the
Board of Directors.
2.24 ''Issue Date'' shall mean the first date on which shares of Class 1
ESOP Preferred Stock are issued.
2.25 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.26 ''Measuring Date'' shall mean that date which is the 365th day
following the Issue Date.
2.27 ''Non-Dilutive Amount'' in respect of an issuance, sale or exchange by
the Corporation of any Equity Securities (other than Common Stock) shall mean
the excess of (i) the product of the Fair Market Value of a share of Common
Stock on the day preceding the first public announcement of such issuance, sale
or exchange multiplied by the maximum number of shares of Common Stock which
could be acquired on such date upon the exercise,
28
conversion or exchange in full of such Equity Securities (and any Equity
Securities receivable upon exercise, conversion or exchange thereof), whether or
not then exercisable, convertible or exchangeable at such date, over (ii) the
aggregate amount payable pursuant to the exercise, conversion or exchange of
such Equity Securities, whether or not then exercisable, convertible or
exchangeable, to purchase or acquire such maximum number of shares of Common
Stock (and any Equity Securities receivable upon exercise, conversion or
exchange thereof); provided, however, that in no event shall the Non-Dilutive
Amount be less than zero. For purposes of the foregoing sentence, the amount
payable pursuant to the exercise, conversion or exchange of such Equity
Securities to purchase or acquire shares of Common Stock shall be deemed to be
the Fair Market Value of the consideration payable pursuant to the exercise,
conversion or exchange of such Equity Securities on the date of the issuance,
sale or exchange of such Equity Securities by the Corporation (excluding for
that purpose the Fair Market Value of the Equity Security to be so exercised,
converted or exchanged).
2.28 ''Pro Rata Repurchase'' shall mean any purchase of shares of Common
Stock by the Corporation or any Affiliate thereof, whether for cash, shares of
capital stock of the Corporation, other securities of the Corporation, evidences
of indebtedness of the Corporation or any other person or any other property
(including, without limitation, shares of capital stock, other securities or
evidences of indebtedness of a subsidiary of the Corporation), or any
combination thereof, effected while any of the shares of Class 1 ESOP Preferred
Stock are outstanding, pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Securities Exchange Act of 1934, as amended (the ''Exchange
Act''), or any successor provision of law, or pursuant to any other offer
available to substantially all holders of Common Stock; provided, however, that
''Pro Rata Repurchase'' shall not include any purchase of shares by the
Corporation or any subsidiary thereof made in open market transactions
substantially in accordance with the requirements of Rule 10b-18 as in effect
under the Exchange Act or on such other terms and conditions as the Board of
Directors shall have determined are reasonably designed to prevent such
purchases from having a material effect on the trading market for the Common
Stock. The ''Effective Date'' of a Pro Rata Repurchase shall mean the date of
acceptance of shares for purchase or exchange under any tender or exchange offer
which is a Pro Rata Repurchase or the date of purchase with respect to any Pro
Rata Repurchase that is not a tender or exchange offer.
2.29 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.30 ''Rights'' shall mean the rights of the Corporation issued or issuable
under the Corporation's Rights Agreement dated as of December 11, 1986, and as
amended from time to time (the ''Rights Agreement''), or rights to purchase any
capital stock of the Corporation issued or issuable under any successor
shareholder rights plan or plans adopted in replacement of the Rights Agreement.
2.31 ''Series A Debentures'' shall mean the Series A Debentures due 2004 of
United Air Lines, Inc.
2.32 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.33 ''Series B Debentures'' shall mean the Series B Debentures due 2014 of
United Air Lines, Inc.
2.34 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.35 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.36 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
29
2.37 [Reserved]
2.38 ''set apart for payment'' shall be deemed to include, without any
action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however, that if any funds for any
class or series of stock of the Corporation ranking on a parity with or junior
to the Class 1 ESOP Preferred Stock as to the payment of dividends or
distributions are placed in a separate account of the Corporation or delivered
to a disbursing, paying or other similar agent, then ''set apart for payment''
with respect to the Class 1 ESOP Preferred Stock shall mean, with respect to
such dividends or distributions, placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
2.39 ''Trading Day'' shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading or quoted on the NYSE, on the principal national securities exchange on
which such securities are listed or admitted, or if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market, or if such securities are not quoted on such National Market, in the
applicable securities market in which the securities are traded.
2.40 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class 1 ESOP Preferred Stock.
2.41 ''Voting Preferred Stocks'' shall mean collectively, the Class M Voting
Preferred Stock, the Class P Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends.
3.1 The holders of shares of the Class 1 ESOP Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
assets legally available for that purpose, dividends payable in cash at the rate
per annum of (i) an amount per share of Class 1 ESOP Preferred Stock with
respect to any Dividend Period ending on or before March 31, 2000 equal to seven
percent of the result of dividing (x) the Purchase Price (as defined in and
determined pursuant to Section 1 of the Preferred Stock Purchase Agreement,
dated as of March 25, 1994, as amended, between the Corporation and State Street
Bank and Trust Company as trustee for the UAL Corporation Employee Stock
Ownership Plan Trust (the ''Agreement''), a copy of which is on file in the
office of the Secretary of the Corporation) of the shares of Class 1 ESOP
Preferred Stock purchased pursuant to Section 1 of the Agreement by (y) the
number of shares of Class 1 ESOP Preferred Stock purchased pursuant to Section 1
of the Agreement and (ii) zero thereafter (the ''Fixed Dividend''). Such Fixed
Dividends shall be cumulative from the Issue Date until the penultimate Business
Day in the calendar quarter ending March 31, 2000, whether or not in any
Dividend Period or Periods there shall be assets of the Corporation legally
available for the payment of such Fixed Dividends and whether or not the Board
of Directors shall have declared such Fixed Dividends, and shall be payable
annually (except as otherwise provided herein) when, as and if declared by the
Board of Directors, in arrears on Dividend Payment Dates, commencing on the
penultimate Business Day of 1994. Each such Fixed Dividend shall be payable in
arrears to the holders of record of shares of the Class 1 ESOP Preferred Stock,
as they appear on the stock records of the Corporation at the close of business
on such record dates, which shall not be more than 60 days nor less than 10 days
preceding the Dividend Payment Dates thereof, as shall be fixed by the Board of
Directors. Accrued and unpaid Fixed Dividends for any past Dividend Periods
ending on or prior to the penultimate Business Day in the calendar quarter
ending March 31, 2000 may be declared and paid at any time, without reference to
any Dividend Payment Date, to holders of record on such date, not exceeding 45
days preceding the payment date thereof, as may be fixed by the Board of
Directors. Holders of the Class 1 ESOP Preferred Stock shall be entitled to the
cumulative Fixed Dividend provided in this Section 3.1 and the additional
cumulative dividends provided in Section 3.5 and shall not be entitled to any
other dividends in excess thereof.
3.2 The amount of Fixed Dividends payable for the initial Dividend Period,
or any other period shorter or longer than a full Dividend Period, on the Class
1 ESOP Preferred Stock shall be computed on the basis of twelve 30-day months
and a 360-day year. Except as provided in Section 3.5, holders of shares of
Class 1 ESOP Preferred
30
Stock shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of cumulative Fixed Dividends, as herein provided, on the
Class 1 ESOP Preferred Stock. No interest, or sum of money in lieu of interest,
shall be payable in respect of any Fixed Dividend payment or payments on the
Class 1 ESOP Preferred Stock that may be in arrears.
3.3 So long as any shares of the Class 1 ESOP Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on any other class or series
of stock of the Corporation ranking on a parity with the Class 1 ESOP Preferred
Stock as to the payment of dividends for any period unless full cumulative Fixed
Dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Class 1
ESOP Preferred Stock for all Dividend Periods terminating on or prior to the
date of payment of the dividends on such class or series of parity stock. When
Fixed Dividends are not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, all dividends declared upon the Class 1 ESOP Preferred
Stock and such parity stock shall be declared ratably in proportion to the
respective amounts of Fixed Dividends accumulated and unpaid on the Class 1 ESOP
Preferred Stock and dividends accumulated and unpaid on such parity stock.
Notwithstanding the foregoing to the contrary, cumulated Fixed Dividends that
remain unpaid on April 1, 2000 shall not prevent the payment of a dividend on
any other security on or after April 1, 2000 to the extent that, on the Dividend
Payment Date occurring on or prior to April 1, 2000 with respect to the Class 1
ESOP Preferred Stock that immediately followed the last payment of a dividend on
the Series A Preferred Stock or the Series B Preferred Stock, (a) the unpaid
current and cumulated dividends on the Class 1 ESOP Preferred Stock as of such
Dividend Payment Date exceeds (b) the surplus of the Corporation available on
such Dividend Payment Date to pay Fixed Dividends on the Class 1 ESOP Preferred
Stock after (I) the payment in full of all unpaid current and cumulated
dividends in respect of all other classes or series of stock of the Corporation
ranking senior to the Class 1 ESOP Preferred Stock as to the payment of
dividends and (II) the payment on a pro rata basis of all unpaid current and
cumulated dividends in respect of all other classes or series of stock of the
Corporation ranking on a parity with the Class 1 ESOP Preferred Stock as to the
payment of dividends, provided that an amount equal to the lesser of the amounts
described in clause (a) and clause (b) must be paid as a dividend in respect of
the Class 1 ESOP Preferred Stock before any amount may be paid as a dividend in
respect of any class or series of stock of the Corporation that ranks junior to
the Class 1 ESOP Preferred Stock as to the payment of dividends (the amount of
such excess, the ''Designated Amount''), provided further that the Designated
Amount plus all unpaid Fixed Dividends on the Class 1 ESOP Preferred Stock that
accrue in respect of Dividend Payment Dates that occurred after such Dividend
Payment Date shall remain part of the accrued and unpaid dividends on the Class
1 ESOP Preferred Stock for the purpose of Section 4.
3.4 So long as any shares of the Class 1 ESOP Preferred Stock are
outstanding, no dividends (other than (i) the Rights and (ii) dividends or
distributions paid in shares of, or options, warrants, or rights to subscribe
for or purchase shares of, any class or series of stock of the Corporation that
is junior to the Class 1 ESOP Preferred Stock as to the payment of dividends)
shall be declared or paid or set apart for payment or other distribution
declared or made upon any class or series of stock of the Corporation that is
junior to the Class 1 ESOP Preferred Stock as to the payment of dividends, nor
shall any other class or series of stock of the Corporation ranking on a parity
with or junior to the Class 1 ESOP Preferred Stock as to the payment of
dividends or as to distributions upon liquidation, dissolution or winding up of
the Corporation, be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange for
any class or series of stock of the Corporation that is junior to the Class 1
ESOP Preferred Stock as to the payment of dividends and as to distributions upon
liquidation, dissolution or winding up of the Corporation), unless in each case
the full cumulative Fixed Dividends on all outstanding shares of the Class 1
ESOP Preferred Stock shall have been paid or set apart for payment for all past
Dividend Periods with respect to the Class 1 ESOP Preferred Stock and such
parity stock. Notwithstanding the foregoing to the contrary, cumulated Fixed
Dividends that remain unpaid on April 1, 2000 shall not prevent the payment of a
dividend on any other security on or after April 1, 2000 to the extent that, on
the Dividend Payment Date occurring on or prior to April 1, 2000 with respect to
the Class 1 ESOP Preferred Stock that immediately followed the last payment of a
dividend on the Series A Preferred Stock or the Series B Preferred Stock, (a)
the unpaid current and cumulated dividends on the Class 1
31
ESOP Preferred Stock as of such Dividend Payment Date exceeds (b) the surplus of
the Corporation available on such Dividend Payment Date to pay Fixed Dividends
on the Class 1 ESOP Preferred Stock after (I) the payment in full of all unpaid
current and cumulated dividends in respect of all other classes or series of
stock of the Corporation ranking senior to the Class 1 ESOP Preferred Stock as
to the payment of dividends and (II) the payment on a pro rata basis of all
unpaid current and cumulated dividends in respect of all other classes or series
of stock of the Corporation ranking on a parity with the Class 1 ESOP Preferred
Stock as to the payment of dividends, provided that an amount equal to the
lesser of the amounts described in clause (a) and clause (b) must be paid as a
dividend in respect of the Class 1 ESOP Preferred Stock before any amount may be
paid as a dividend in respect of any class or series of stock of the Corporation
that ranks junior to the Class 1 ESOP Preferred Stock as to the payment of
dividends, provided further that the Designated Amount plus all unpaid Fixed
Dividends on the Class 1 ESOP Preferred Stock that accrue in respect of Dividend
Payment Dates that occurred after such Dividend Payment Date shall remain part
of the accrued and unpaid dividends on the Class 1 ESOP Preferred Stock for the
purpose of Section 4.
3.5 If, during the period ending upon the most recent Dividend Payment Date
and beginning on the immediately prior Dividend Payment Date or, if none, the
Issue Date, cash dividends have been paid to the holders of Common Stock which,
if paid at the same rate (per outstanding share of Common Stock) with respect to
the shares of Common Stock into which the Class 1 ESOP Preferred Stock is
convertible, would be in excess of the sum of the amounts of the Fixed Dividends
which have been or will have been paid during such period ending on such
Dividend Payment Date, the holders of shares of Class 1 ESOP Preferred Stock
shall be entitled to receive on such Dividend Payment Date, in addition to the
Fixed Dividends payable on such Dividend Payment Date, an additional dividend
equal to the excess of (a) the dividends which would have been received during
such period with respect to the shares of Common Stock which would have been
issued upon conversion of the Class 1 ESOP Preferred Stock had the Class 1 ESOP
Preferred Stock been outstanding as Common Stock at each relevant time in order
to receive such dividends (but only to the extent such dividends do not
constitute an Extraordinary Distribution under clause (i) of the definition
thereof), over (b) the sum of the amount of (i) the Fixed Dividends which have
been or will have been paid during such period and (ii) the amount previously
paid pursuant to this Section 3.5 during such period, which additional dividends
(hereinafter referred to as ''Participating Dividends'') shall be paid in cash,
pro-rata to each holder of Class 1 ESOP Preferred Stock. In the event that an
adjustment is made pursuant to the second paragraph of Section 6.4(d) with
respect to shares of Class 1 ESOP Preferred Stock converted during the period
referred to above, the amount of Participating Dividend to be paid in accordance
with the preceding sentence shall be reduced by an amount equal to the product
of (x) the number of shares of Common Stock into which such converted shares of
Class 1 ESOP Preferred Stock would have been converted in the absence of such
adjustment and (y) the amount of the cash dividend or distributions per share of
Common Stock in respect of which such adjustment was made.
3.6 In respect of any Dividend Payment Date on which both Fixed Dividends
and Participating Dividends are due, or at any time that both Fixed Dividends
and Participating Dividends are unpaid, dividend payments made on the Class 1
ESOP Preferred Stock shall be applied first to unpaid Participating Dividends
and, after all Participating Dividends are paid in full, then to unpaid Fixed
Dividends.
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class 1 ESOP Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class 1 ESOP Preferred Stock shall be entitled to
receive an amount per share of Class 1 ESOP Preferred Stock equal to the sum of
(a) the result of dividing (i) the Purchase Price (as defined in and determined
pursuant to Section 1 of the Preferred Stock Purchase Agreement, dated as of
March 25, 1994, as amended, between the Corporation and State Street Bank and
Trust Company as trustee for the UAL Corporation Employee Stock Ownership Plan
Trust (the ''Agreement''), a copy of which is on file in the office of the
Secretary of the Corporation) of the shares of Class 1 ESOP Preferred Stock
purchased pursuant to Section 1 of the Agreement by (ii) the number of shares of
Class 1 ESOP Preferred Stock purchased pursuant to Section 1 of the Agreement
and
32
(b) an amount equal to all dividends (whether or not earned or declared) accrued
and unpaid thereon to the date of final distribution to such holders
(collectively, the ''Liquidation Preference''), but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of Class 1 ESOP Preferred
Stock shall be insufficient to pay in full the Liquidation Preference and the
liquidation preference on all other shares of any class or series of stock of
the Corporation that ranks on a parity with the Class 1 ESOP Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof, shall be distributed
among the holders of shares of Class 1 ESOP Preferred Stock and any such other
parity stock ratably in accordance with the respective amounts that would be
payable on such shares of Class 1 ESOP Preferred Stock and any such other parity
stock if all amounts payable thereon were paid in full. For the purposes of this
Section 4, (i) a consolidation or merger of the Corporation with or into one or
more corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any class or series of
stock ranking prior to or on a parity with the Class 1 ESOP Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holders of the Class 1
ESOP Preferred Stock, as and to the fullest extent provided in this Section 4,
any other class or series of stock of the Corporation that ranks junior to the
Class 1 ESOP Preferred Stock as to amounts distributable upon dissolution,
liquidation or winding up of the Corporation shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the Class 1
ESOP Preferred Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. All shares of Class 1 ESOP Preferred
Stock which shall have been issued and reacquired in any manner by the
Corporation shall be retired and shall not be reissued.
Section 6. Conversion. Holders of shares of Class 1 ESOP Preferred Stock
shall have the right to convert all or a portion of such shares into shares of
Common Stock as follows:
6.1 Subject to and upon compliance with the provisions of this Section 6, a
holder of shares of Class 1 ESOP Preferred Stock shall have the right, at such
holder's option, at any time and from time to time, to convert all or any of
such shares into fully paid and nonassessable shares of Common Stock at a rate
of one share of Common Stock for one share of Class 1 ESOP Preferred Stock
subject to adjustment as provided in this Section 6 (as so adjusted, the
''Conversion Rate'') by surrendering such shares to be converted, such surrender
to be made in the manner provided in Section 6.2. Certificates shall be issued
for the remaining shares of Class 1 ESOP Preferred Stock if fewer than all of
the shares of Class 1 ESOP Preferred Stock represented by a certificate are
converted.
6.2 In order to exercise the conversion right, the holder of shares of
Class 1 ESOP Preferred Stock to be converted shall surrender the certificate or
certificates representing such shares, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent in the Borough of
Manhattan, City of New York, accompanied by written notice to the Corporation
that the holder thereof elects to convert Class 1 ESOP Preferred Stock. Unless
the shares issuable on conversion are to be issued in the same name as the name
in which such share of Class 1 ESOP Preferred Stock is registered, each share
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid or that no such taxes are payable).
Holders of shares of Class 1 ESOP Preferred Stock at the close of business on
a dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date. The Corporation
shall make no payment or allowance for unpaid dividends on the shares of Common
Stock issued upon such conversion.
33
As promptly as practicable after the surrender of certificates for shares of
Class 1 ESOP Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on such holder's written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 6, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in Section 6.3.
Each conversion shall be deemed to have been effected immediately prior to the
close of business on the date on which the certificates for shares of Class 1
ESOP Preferred Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend payable on such shares)
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Rate in effect at such time on
such date, unless the stock transfer books of the Corporation shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Rate in effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
6.3 No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon conversion of the Class 1 ESOP Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Class 1 ESOP
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than one certificate shall
be surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Class 1 ESOP Preferred Stock so
surrendered.
6.4 The Conversion Rate shall be adjusted from time to time as follows:
(a) In case the Corporation shall, at any time or from time to time while
any of the shares of Class 1 ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution on its capital stock in shares of its Common
Stock, (ii) subdivide its outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number of
shares or (iv) issue any shares of capital stock by reclassification of its
Common Stock, the Conversion Rate in effect at the opening of business on the
day next following the date fixed for the determination of stockholders
entitled to receive such dividend or distribution or at the opening of
business on the day next following the day on which such subdivision,
combination or reclassification becomes effective, as the case may be, shall
be adjusted so that the holder of any share of Class 1 ESOP Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Common Stock or other capital stock that such holder would have
owned or have been entitled to receive after the happening of any of the
events described above had such share been converted immediately prior to the
record date in the case of a dividend or distribution or the effective date in
the case of a subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph (a) shall become effective immediately after the
opening of business on the day next following the record date (except as
provided in Section 6.7 below) in the case of a dividend or distribution and
shall become effective immediately after the opening of business on the day
next following the effective date in the case of a subdivision, combination or
reclassification.
(b) In case the Corporation shall, at any time or from time to time while
any of the shares of Class 1 ESOP Preferred Stock are outstanding, issue
Equity Securities (other than Common Stock and the Rights) (the ''Issued
Equity Securities'') to all holders of shares of its Common Stock entitling
them (for a period expiring within 45 days after the record date for such
issuance) to subscribe for or purchase (whether by exercise, conversion,
exchange or otherwise) shares of Common Stock (or other Equity Securities) at
a price per share less than the Fair Market Value of the Common Stock (or the
other Equity Security to be acquired) at such record date (treating the price
per share of the Equity Securities to be acquired as equal to (x) the sum of
(i) the Fair Market
34
Value of the consideration payable for a unit of the Equity Security plus (ii)
the Fair Market Value of any additional consideration initially payable upon
the exercise, conversion or exchange of such security into Common Stock
divided by (y) the number of shares of Common Stock initially underlying or
that may be acquired upon the exercise, conversion or exchange of such Equity
Security), the Conversion Rate shall be adjusted so that it shall equal the
rate determined by multiplying the Conversion Rate in effect immediately prior
to the date of issuance of such Issued Equity Securities by a fraction, the
numerator of which shall be the sum of (A) the number of shares of Common
Stock outstanding on the date of issuance of such Issued Equity Securities
plus (B) the number of additional shares of Common Stock offered for
subscription or purchase (including, without limitation, the security
underlying or that may be acquired upon the exercise, conversion or exchange
of the Equity Securities so offered) and the denominator of which shall be the
sum of (A) the number of shares of Common Stock outstanding on the date of
issuance of such Issued Equity Securities plus (B) the number of shares of
Common Stock that the aggregate offering price of the total number of shares
so offered for subscription or purchase (including, without limitation, the
Fair Market Value of the consideration payable for a unit of the Equity
Securities so offered plus the Fair Market Value of any additional
consideration payable upon exercise, conversion or exchange of such Equity
Securities) would purchase at such Fair Market Value of the Common Stock as of
the record date for such issuance. Such adjustment shall become effective as
of the record date for the determination of stockholders entitled to receive
such Issued Equity Securities (except as provided in Section 6.6 below).
(c) In case the Corporation shall, at any time or from time to time while
any of the shares of Class 1 ESOP Preferred Stock are outstanding, issue, sell
or exchange shares of Common Stock (other than pursuant to any Rights, Equity
Securities issued in connection with any employee or director incentive or
benefit plan or arrangement of the Corporation or any subsidiary or any Equity
Security theretofore outstanding entitling the holder to purchase or acquire
shares of Common Stock) for a consideration having a Fair Market Value on the
date of such issuance, sale or exchange less than the Fair Market Value of
such shares of Common Stock on the date of such issuance, sale or exchange,
then the Conversion Rate in effect immediately prior to such issuance, sale or
exchange shall be adjusted by multiplying such Conversion Rate by a fraction,
the numerator of which shall be the product of (i) the Fair Market Value of a
share of Common Stock on the Trading Day immediately preceding the first
public announcement of such issuance, sale or exchange multiplied by (ii) the
sum of the number of shares of Common Stock outstanding on such day plus the
number of shares of Common Stock so issued, sold or exchanged by the
Corporation, and the denominator of which shall be the sum of (i) the Fair
Market Value of all the shares of Common Stock outstanding on the Trading Day
immediately preceding the first public announcement of such issuance, sale or
exchange plus (ii) the Fair Market Value of the consideration received by the
Corporation in respect of such issuance, sale or exchange of shares of Common
Stock. In case the Corporation shall, at any time or from time to time while
any of the shares of Class 1 ESOP Preferred Stock are outstanding, issue, sell
or exchange any Equity Security (other than any Rights, Equity Securities
issued in connection with any employee or director incentive or benefit plan
or arrangement of the Corporation or any subsidiary or Common Stock) other
than any such issuance to all holders of shares of Common Stock as a dividend
or distribution (including by way of a reclassification of shares or a
recapitalization of the Corporation) for a consideration having a Fair Market
Value on the date of such issuance, sale or exchange less than the Non-
Dilutive Amount, then the Conversion Rate shall be adjusted by multiplying
such Conversion Rate by a fraction, the numerator of which shall be the
product of (i) the Fair Market Value of a share of Common Stock on the Trading
Day immediately preceding the first public announcement of such issuance, sale
or exchange multiplied by (ii) the sum of the number of shares of Common Stock
outstanding on such day plus the maximum number of shares of Common Stock
underlying or which could be acquired pursuant to such Equity Security at the
time of the issuance, sale or exchange of such Equity Security (assuming
shares of Common Stock could be acquired pursuant to such Equity Security at
such time), and the denominator of which shall be the sum of (i) the Fair
Market Value of all the shares of Common Stock outstanding on the Trading Day
immediately preceding the first public announcement of such issuance, sale or
exchange plus (ii) the Fair Market Value of the consideration received by the
Corporation in respect of such issuance, sale or exchange of such Equity
Security plus (iii) the Fair Market Value as of the time of such issuance of
the consideration which the Corporation would receive upon exercise,
conversion or exchange in full of all such Equity Securities.
35
(d) In case the Corporation shall, at any time or from time to time while
any of the shares of Class 1 ESOP Preferred Stock are outstanding, make an
Extraordinary Distribution in respect of the Common Stock or effect a Pro Rata
Repurchase of Common Stock, the Conversion Rate in effect immediately prior to
such Extraordinary Distribution or Pro Rata Repurchase shall be adjusted by
multiplying such Conversion Rate by a fraction, the numerator of which shall
be the product of (i) the number of shares of Common Stock outstanding
immediately before such Extraordinary Dividend or Pro Rata Repurchase (minus,
in the case of a Pro Rata Repurchase, the number of shares of Common Stock
repurchased by the Corporation) multiplied by (ii) the Fair Market Value of a
share of Common Stock on the record date with respect to such Extraordinary
Distribution or on the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of the intent to
effect a Pro Rata Repurchase, as the case may be, and the denominator of which
shall be (i) the product of (x) the number of shares of Common Stock
outstanding immediately before such Extraordinary Distribution or Pro Rata
Repurchase multiplied by (y) the Fair Market Value of a share of Common Stock
on the record date with respect to such Extraordinary Distribution, or on the
Trading Day immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect a Pro Rata
Repurchase, as the case may be, minus (ii) the Fair Market Value of the
Extraordinary Distribution or the aggregate purchase price of the Pro Rata
Repurchase, as the case may be (provided that such denominator shall never be
less than 1.0); provided, however, that no Pro Rata Repurchase shall cause an
adjustment to the Conversion Rate unless the amount of all cash dividends and
distributions made to holders of Common Stock during the period from the
latest to occur of the Issue Date or the most recent Dividend Payment Date
preceding the Effective Date of such Pro Rata Repurchase, when combined with
the aggregate amount of all Pro Rata Repurchases, including such Pro Rata
Repurchase (for all purposes of this Section 7.4(d), including only that
portion of the Fair Market Value of the aggregate purchase price of each Pro
Rata Repurchase which is in excess of the Fair Market Value of the Common
Stock repurchased as determined on the Trading Day immediately preceding the
first public announcement by the Corporation or any of its Affiliates of the
intent to effect each such Pro Rata Repurchase), the Effective Dates of which
fall within such period, exceeds twelve and one-half percent (12-1/2%) of the
aggregate Fair Market Value of all shares of Common Stock outstanding on the
Trading Day immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect such Pro Rata
Repurchase. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
Extraordinary Distribution or immediately after the Effective Date of such Pro
Rata Repurchase.
Solely as an adjustment applicable to shares of Class 1 ESOP Preferred
Stock that are being converted into Common Stock as of a given date, and not
as a permanent adjustment to the Conversion Rate, the Conversion Rate in
effect immediately prior to such conversion shall be adjusted by multiplying
such Conversion Rate by a fraction, the numerator of which shall be the
product of (i) the number of shares of Common Stock outstanding immediately
before such conversion multiplied by (ii) the Fair Market Value of a share of
Common Stock on the date of such conversion, and the denominator of which
shall be (i) the product of (x) the number of shares of Common Stock
outstanding immediately before such conversion multiplied by (y) the Fair
Market Value of a share of Common Stock on the date of such conversion minus
(ii) the Fair Market Value of the cash dividends and distributions made on or
before the date of such conversion with a record date after the later of the
Issue Date or the most recent Dividend Payment Date upon which Participating
Dividends were paid in full, but only to the extent that such cash dividends
and distributions (a) would entitle the holders of the shares of Class 1 ESOP
Preferred Stock outstanding on such conversion date to a dividend under
Section 3.5 that has not been paid and (b) would not constitute an
Extraordinary Distribution (provided that such denominator shall never be less
than 1.0).
(e) No adjustment in the Conversion Rate shall be required unless such
adjustment would require a cumulative increase or decrease of at least 0.01%
in such rate; provided that any adjustments that by reason of this
subparagraph (e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made; and provided
further that any adjustment shall be required and made in accordance with the
provisions of this Section 6.4 (other than this subparagraph (e)) not later
than such time as may be required in order to preserve the taxfree nature of a
distribution to the holders of shares of Common Stock. Notwithstanding any
other provisions of this Section 6, the Corporation shall not be required to
make
36
any adjustments of the Conversion Rate for the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends
on securities of the Corporation so long as the holders of the Class 1 ESOP
Preferred Stock shall be entitled to participate therein on substantially the
same terms as holders of Common Stock. All calculations under this Section 6
shall be made to the nearest cent (with $.005 being rounded upward), one-tenth
of a share (with .05 of a share being rounded upward) or, in the case of the
Conversion Rate, one hundred millionth of a share (with .000000005 being
rounded upward), as the case may be. Anything in this Section 6.4 to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Rate, in addition
to those required by this Section 6.4, as it in its discretion shall determine
to be advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or warrants
to purchase stock or securities, or a distribution of other assets (other than
cash dividends) hereafter made by the Corporation to its stockholders shall
not be taxable.
6.5 If:
(a) the Corporation shall declare a dividend or any other distribution on
the Common Stock (other than the Rights); or
(b) the Corporation shall authorize the granting to the holders of the
Common Stock of Equity Securities (other than Common Stock) to subscribe for
or purchase any Equity Security; or
(c) there shall be any reclassification of the Common Stock (other than an
event to which Section 6.4(a) applies) or any consolidation or merger to which
the Corporation is a party and for which approval of any stockholders of the
Corporation is required, or the sale or transfer of all or substantially all
of the assets of the Corporation as an entirety; or
(d) there shall occur the voluntary or involuntary liquidation, dissolution
or winding up of the Corporation; or
(e) there shall occur any Pro Rata Repurchase,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of shares of the Class 1 ESOP Preferred Stock
at their addresses as shown on the stock records of the Corporation, as promptly
as possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of Equity Securities, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or granting of Equity
Securities are to be determined, (B) the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up or (C) the number of shares subject to such offer for
a Pro Rata Repurchase and the purchase price payable by the Corporation pursuant
to such offer. Failure to give or receive such notice or any defect therein
shall not affect the legality or validity of the proceedings described in this
Section 6.
6.6 Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring and the manner of effecting such
adjustment which certificate shall be prima facie evidence of the correctness of
such adjustment. Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion Rate setting forth
the adjusted Conversion Rate and the effective date of such adjustment or
adjustments and shall mail such notice of such adjustment or adjustments to the
holder of each share of Class 1 ESOP Preferred Stock at such holder's last
address as shown on the stock records of the Corporation.
37
6.7 In any case in which Section 6.4 provides that an adjustment shall become
effective on the day next following a record date for an event, the Corporation
may defer until the occurrence of such event (A) issuing to the holder of any
share of Class 1 ESOP Preferred Stock converted after such record date and
before the occurrence of such event the additional shares of Common Stock or
other securities issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock or other securities
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of any fraction pursuant to
Section 6.3.
6.8 For purposes of this Section 6, the number of shares of Common Stock at
any time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of the Corporation or any subsidiary. The Corporation
shall not pay a dividend or make any distribution on shares of Common Stock held
in the treasury of the Corporation.
6.9 There shall be no adjustment of the Conversion Rate in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in Section 6 or
Section 7. If any action or transaction would require adjustment of the
Conversion Rate pursuant to more than one paragraph of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
6.10 If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 6, that in the opinion of the Board
of Directors would materially adversely affect the conversion rights of the
holders of the shares of Class 1 ESOP Preferred Stock, the Conversion Rate for
the Class 1 ESOP Preferred Stock may be adjusted, to the extent permitted by
law, in such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
6.11 The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Class 1
ESOP Preferred Stock, the full number of shares of Common Stock deliverable upon
the conversion of all outstanding shares of Class 1 ESOP Preferred Stock not
theretofore converted. For purposes of this Section 6.11, the number of shares
of Common Stock that shall be deliverable upon the conversion of all outstanding
shares of Class 1 ESOP Preferred Stock shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the Class 1 ESOP Preferred Stock shall be validly issued, fully
paid and non-assessable.
The Corporation shall endeavor to list the shares of Common Stock (or other
securities) required to be delivered upon conversion of the Class 1 ESOP
Preferred Stock, prior to such delivery, upon each national securities exchange,
if any, upon which the outstanding Common Stock (or other securities) is listed
at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Class 1 ESOP Preferred Stock, the
Corporation shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
6.12 The Corporation shall pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the Class 1 ESOP
Preferred Stock pursuant hereto; provided that the Corporation shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the Class 1 ESOP Preferred
Stock to be converted and no such issue or delivery shall be made unless and
until the person requesting any such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
38
6.13 If, prior to the Distribution Date (as defined for purposes of the
Rights), the Corporation shall issue shares of Common Stock upon conversion of
shares of Class 1 ESOP Preferred Stock as contemplated by this Section 6, the
Corporation shall issue together with each such share of Common Stock that
number of Rights as are then issuable, pursuant to the Rights Agreement (or any
successor rights plan or plans adopted in replacement of the Rights Agreement),
per share of such Common Stock so issued, but only if at such time such Rights
or rights are, pursuant to the relevant rights agreement, to be represented by
certificates representing shares of Common Stock and have not expired.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any consolidation, merger, share
exchange or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged solely for or changed,
reclassified or converted solely into stock of any successor or resulting or
other company (including the Corporation) that constitutes ''qualifying employer
securities'' with respect to holders of Class 1 ESOP Preferred Stock within the
meaning of Section 409(l) of the Code and Section 407(d)(5) of the Employee
Retirement Income Security Act of 1974, as amended, or any successor provisions
of law, and, if applicable, for a cash payment in lieu of fractional shares, if
any, proper provisions shall be made so that upon consummation of such
transaction, the shares of Class 1 ESOP Preferred Stock shall be converted into
or exchanged for preferred stock of such successor or resulting or other
company, having in respect of such company, the same powers, preferences and
relative, participating, optional or other special rights (including the rights
provided by this Section 7), and the qualifications, limitations or restrictions
thereof, that the Class 1 ESOP Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction, except that after such
transaction each share of preferred stock of the surviving or resulting or other
company so received in such transaction upon conversion or exchange of the Class
1 ESOP Preferred Stock shall be convertible, otherwise on the terms and
conditions provided by Section 6 hereof, into the number and kind of
''qualifying employer securities'' receivable in such transaction by a holder of
the number of shares of Common Stock into which a share of Class 1 ESOP
Preferred Stock could have been converted immediately prior to such transaction;
provided, however, that if by virtue of the structure of such transaction, a
holder of Common Stock is required to make an election with respect to the
nature and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holders of the Class 1 ESOP Preferred
Stock, then the shares of preferred stock of the surviving or resulting or other
company received in such transaction upon conversion or exchange of Class 1 ESOP
Preferred Stock shall, by virtue of such transaction and on the same terms as
apply to the holders of Common Stock, be convertible into or exchangeable solely
for ''qualifying employer securities'' (together, if applicable, with a cash
payment in lieu of fractional shares) with the effect provided above on the
basis of the number and kind of qualifying employer securities receivable in
such transaction by a holder of the number of shares of Common Stock into which
such shares of Class 1 ESOP Preferred Stock could have been converted
immediately prior to such transaction (provided that if the kind or amount of
qualifying employer securities receivable in such transaction is not the same
for each such share of Common Stock, then the kind and amount so receivable in
such transaction for each share of Common Stock for this purpose shall be deemed
to be the kind and amount so receivable per share by the plurality of such
shares of Common Stock). The rights of the preferred stock of such successor or
resulting or other company so received in such transaction upon conversion or
exchange of the Class 1 ESOP Preferred Stock shall successively be subject to
adjustments pursuant to Section 6 hereof following such transaction as nearly
equivalent to the adjustments provided for by such Sections prior to such
transaction.
7.2 In case the Corporation shall enter into any consolidation, merger, share
exchange or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged for or changed,
reclassified or converted into other stock or securities or cash or any other
property, or any combination thereof, other than any such consideration which is
constituted solely of ''qualifying employer securities'' (as referred to in
Section 7.1) and cash payments, if applicable, in lieu of fractional shares,
proper provisions shall be made so that upon consummation of such transaction
the outstanding shares of Class 1 ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as are applicable to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable by holders
of the number of shares of Common Stock into which such shares of Class 1 ESOP
Preferred Stock could
39
have been converted immediately prior to such transaction; provided, however,
that if by virtue of the structure of such transaction, a holder of Common Stock
is required to make an election with respect to the nature and kind of
consideration to be received in such transaction, which election cannot
practicably be made by holders of the Class 1 ESOP Preferred Stock, then the
shares of Class 1 ESOP Preferred Stock shall, by virtue of such transaction and
on the same terms as apply to the holders of Common Stock, be converted into or
exchanged for the aggregate amount of stock, securities, cash or other property
(payable in kind) receivable by a holder of the number of shares of Common Stock
into which such shares of Class 1 ESOP Preferred Stock could have been converted
immediately prior to such transaction if such holder of Common Stock failed to
exercise any rights of election to receive any kind or amount of stock,
securities, cash or other property receivable in such transaction (provided that
if the kind or amount of stock, securities, cash or other property receivable in
such transaction are not the same for each non-electing share, then the kind and
amount of stock, securities, cash or other property so receivable upon such
transaction for each non-electing share shall be the kind and amount so
receivable per share by the plurality of the non-electing shares).
7.3 In case the Corporation shall enter into any agreement providing for any
consolidation, merger, share exchange or similar transaction described in this
Section 7, then the Corporation shall as soon as practicable thereafter (and in
any event at least fifteen (15) Business Days before consummation of such
transaction) give notice of such agreement and the material terms thereof to
each holder of Class 1 ESOP Preferred Stock. The Corporation shall not
consummate any consolidation, merger, share exchange or similar transaction
unless all of the terms of this Section 7 have been complied with.
Section 8. Ranking.
8.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Class 1 ESOP Preferred Stock, as to the payment of
dividends or as to distributions of assets upon liquidation, dissolution or
winding up, as the case may be, if the holders of such class or series shall
be entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class 1 ESOP Preferred Stock;
(b) on a parity with the Class 1 ESOP Preferred Stock as to the payment of
dividends, whether or not the dividend rates or dividend payment dates thereof
be different from those of the Class 1 ESOP Preferred Stock, if the holders of
such class or series of stock and the Class 1 ESOP Preferred Stock shall be
entitled to the receipt of dividends in proportion to their respective amounts
of accrued and unpaid dividends per share, without preference or priority one
over the other, and on a parity with the Class 1 ESOP Preferred Stock as to
the distribution of assets upon liquidation, dissolution or winding up,
whether or not the liquidation prices per share thereof be different from
those of the Class 1 ESOP Preferred Stock, if the holder of such class or
series of stock and the Class 1 ESOP Preferred Stock shall be entitled to the
receipt of amounts distributable upon liquidation, dissolution or winding up
in proportion to their respective liquidation preferences, without preference
or priority one over the other; and
(c) junior to the Class 1 ESOP Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, as the case may be, if the holders of Class 1 ESOP Preferred Stock
shall be entitled to receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of such class or series.
8.2 The Series A Preferred Stock and the Series B Preferred Stock shall each
be deemed to rank prior to the Class 1 ESOP Preferred Stock both as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up. The Series D Preferred Stock shall be deemed to rank
prior to the Class 1 ESOP Preferred Stock as to the distribution of assets upon
liquidation, dissolution or winding up. The Class 2 ESOP Preferred Stock shall
be deemed to rank on a parity with the Class 1 ESOP Preferred Stock as to the
payment of Participating Dividends and as to amounts distributable upon
liquidation, dissolution or winding up and the Class 2 ESOP Preferred Stock
shall be deemed to rank junior to the Class 1 ESOP Preferred Stock as to the
payment of Fixed Dividends on the Class 1 Preferred Stock. The Common Stock, the
Director Preferred Stocks, the Voting
40
Preferred Stocks and the Series C Preferred Stock shall each be deemed to rank
junior to the Class 1 ESOP Preferred Stock both as to the payment of dividends
and as to the distribution of assets upon liquidation, dissolution or winding
up.
Section 9. Voting. The holders of shares of Class 1 ESOP Preferred Stock
shall have the following voting rights:
9.1 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class 1 ESOP Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote required by law or this
Restated Certificate, the affirmative vote or written consent of the holders of
at least a majority of all of the outstanding shares of Class 1 ESOP Preferred
Stock, voting separately as a class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal (including any
amendment, alteration or repeal by operation of merger or consolidation) of any
of the provisions of this Restated Certificate or of any certificate amendatory
thereof or supplemental thereto (including any Certificate of Designation,
Preferences and Rights or any similar document relating to any series of Serial
Preferred Stock) that would adversely affect the preferences, rights, powers or
privileges of the Class 1 ESOP Preferred Stock; provided, however, that the
amendment of the provisions of this Restated Certificate so as to authorize or
create, or to increase the authorized amount of, any class or series of stock of
the Corporation ranking on a parity with or junior to the Class 1 ESOP Preferred
Stock both as to the payment of dividends and as to the distribution of assets
upon liquidation, dissolution or winding up of the Corporation shall not be
deemed to adversely affect the preferences, rights, powers or privileges of
Class 1 ESOP Preferred Stock.
9.2 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class 1 ESOP Voting Preferred Stock shall then be required by law
or this Restated Certificate, and in addition to any other vote required by law
or this Restated Certificate, the affirmative vote or written consent of the
holders of at least a majority of all of the outstanding shares of Class 1 ESOP
Preferred Stock, voting separately as a class, shall be necessary for
authorizing, effecting or validating the creation, authorization or issuance of
any shares of any class or series of stock of the Corporation ranking prior to
the Class 1 ESOP Preferred Stock either as to payment of dividends or as to
distributions upon liquidation, dissolution or winding up, or the
reclassification of any authorized stock of the Corporation into any such prior
shares, or the creation, authorization or issuance of any obligation or security
convertible into or evidencing the right to purchase any such prior shares.
9.3 For purposes of the foregoing provisions of Sections 9.1 and 9.2, each
share of Class 1 ESOP Preferred Stock shall have one (1) vote per share. Except
as otherwise required by applicable law or as set forth herein, the shares of
Class 1 ESOP Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers and the consent of the
holders thereof shall not be required for the taking of any corporate action.
Section 10. No Redemption. The Class 1 ESOP Preferred Stock shall not be
redeemable in whole or in part.
Section 11. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of any shares
of Class 1 ESOP Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
PART III
Class 2 ESOP Convertible Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part III to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part III.
Section 1. Number of Shares; Designation; Issuance and Automatic Conversion.
41
1.1 The Class 2 ESOP Convertible Preferred Stock of the Corporation (the
''Class 2 ESOP Preferred Stock'') shall consist of 25,000,000 shares, par value
$0.01 per share.
1.2 Shares of Class 2 ESOP Preferred Stock shall be issued only to a trustee
or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership
Plan, or (ii) the UAL Corporation Supplemental ESOP (either of (i) or (ii), a
''Plan''). In the event of any sale, transfer or other disposition (including,
without limitation, upon a foreclosure or other realization upon shares of Class
2 ESOP Preferred Stock pledged as security for any loan or loans made to a Plan
or to the trustee or the trustees acting on behalf of a Plan) (hereinafter a
''transfer'') of shares of Class 2 ESOP Preferred Stock to any person
(including, without limitation, any participant in a Plan) other than (x) any
trustee or trustees of a Plan or (y) any pledgee of such shares acquiring such
shares as security for any loan or loans made to a Plan or to any trustee or
trustees acting on behalf of a Plan, the shares of Class 2 ESOP Preferred Stock
so transferred, upon such transfer and without any further action by the
Corporation or the transferee, shall be automatically converted into shares of
Common Stock at the applicable Conversion Rate in accordance with Section 6
hereof and thereafter such transferee shall not have any of the voting powers,
preferences or relative, participating, optional or special rights ascribed to
shares of Class 2 ESOP Preferred Stock hereunder, but, rather, shall have only
the powers and rights pertaining to the Common Stock into which such shares of
Class 2 ESOP Preferred Stock shall have been so converted. In the event of any
such automatic conversion provided for in this Section 1.2, such transferee
shall be treated for all purposes as the record holder of the shares of Common
Stock into which the Class 2 ESOP Preferred Stock shall have been converted as
of the date of such conversion. Certificates representing shares of Class 2 ESOP
Preferred Stock shall be legended to reflect such consequences of a transfer.
Notwithstanding the foregoing provisions of this Section 1, shares of Class 2
ESOP Preferred Stock may be converted into shares of Common Stock as provided by
Section 6 hereof and the shares of Common Stock issued upon any conversion in
accordance with Section 6 hereof or this Section 1.2 may be transferred by the
holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class 2 ESOP Preferred Stock,
the following terms shall have the meanings indicated:
2.1 ''Affiliate'' shall have the meaning defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended, or any successor thereto.
2.2 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee authorized by such board of directors to perform
any of its responsibilities with respect to the Class 2 ESOP Preferred Stock.
2.3 ''Business Day'' shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
2.4 ''Class 1 ESOP Preferred Stock'' shall mean the Class 1 ESOP Convertible
Preferred Stock, par value $0.01 per share, of the Corporation.
2.5 ''Class 2 ESOP Preferred Stock'' shall have the meaning set forth in
Section 1 hereof.
2.6 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
2.7 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.9 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
42
2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.13 ''Code'' shall mean the Internal Revenue Code of 1986, as amended from
time to time.
2.14 ''Common Stock'' shall mean the common stock of the Corporation, par
value $0.01 per share.
2.15 ''Conversion Rate'' shall have the meaning set forth in Section 6.1
hereof.
2.16 ''Current Market Price'' of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the Corporation or
any other issuer for any day shall mean the last reported sales price, regular
way, on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the New York Stock Exchange Composite Tape or, if such security
is not listed or admitted for trading on the New York Stock Exchange, Inc.
(''NYSE''), on the principal national securities exchange on which such security
is listed or admitted for trading or quoted or, if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market, or, if such security is not quoted on such National Market, the average
of the closing bid and asked prices on such day in the over-the-counter market
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System (''NASDAQ'') or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the average of the bid and
asked prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of Directors.
2.17 ''Director Preferred Stocks'' shall mean collectively, the Class I
Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred
Stock and the Class SAM Preferred Stock.
2.18 ''Dividend Payment Date'' shall mean the penultimate Business Day in each
year, commencing on such penultimate Business Day in 1994; provided that, with
respect to the Dividend Period beginning on January 1, 2000 and ending on March
31, 2000, the Dividend Payment Date shall be the penultimate Business Day in the
calendar quarter ending March 31, 2000.
2.19 ''Dividend Periods'' shall mean annual dividend periods commencing on the
last Business Day of each year and ending on and including the penultimate
Business Day of the next succeeding year (other than the initial Dividend
Period, which shall commence on the Issue Date and end on and include the
penultimate Business Day in 1994).
2.20 ''Equity Securities'' shall mean the Common Stock or any debt, equity or
other security or contractual right convertible into or exercisable or
exchangeable for, or based on the value of, the Common Stock or any warrants,
options or other rights to purchase the Common Stock or other Equity Securities
(other than the Rights).
2.21 ''ESOP Preferred Stocks'' shall mean, collectively, the Class 2 ESOP
Preferred Stock and the Class 1 ESOP Preferred Stock.
2.22 ''Extraordinary Distribution'' shall mean any single dividend or other
distribution (including by reclassification of shares or recapitalization of the
Corporation, as well as any such dividend or distribution made in connection
with a merger or consolidation in which the Corporation is the continuing
corporation and the Common Stock is not changed or exchanged) to holders of
Common Stock (effected while any of the shares of Class 2 ESOP Preferred Stock
are outstanding) (i) of cash, where the aggregate amount of such single cash
dividend or distribution
43
together with the amount of all cash dividends and distributions made to holders
of Common Stock during the period from the latest to occur of the Issue Date or
the most recent Dividend Payment Date until the payment date for such cash
dividend or distribution to holders of Common Stock, when combined with the
aggregate amount of all previous Pro Rata Repurchases during such period (for
this purpose, including only that portion of the aggregate purchase price of
each such Pro Rata Repurchase which is in excess of the Fair Market Value of the
Common Stock repurchased as determined on the Business Day prior to the public
announcement of such Pro Rata Repurchase made during such period), exceeds
twelve and one-half percent (12-1/2%) of the aggregate Fair Market Value of all
shares of Common Stock outstanding on the record date for determining the
shareholders entitled to receive such Extraordinary Distribution and (ii) of any
shares of capital stock of the Corporation (other than shares of Common Stock),
other securities of the Corporation (other than securities of the type referred
to in Sections 6.4(b) and 6.4(c) hereof), evidences of indebtedness of the
Corporation or any other person or any other property (including, without
limitation, shares of capital stock of any subsidiary of the Corporation), or
any combination thereof. The Fair Market Value of any such single dividend or
other distribution that, pursuant to clause (i), constitutes an Extraordinary
Distribution shall for purposes of the first paragraph of Section 6.4(d) hereof
be the sum of the Fair Market Value of such Extraordinary Distribution plus the
amount of any other cash dividends and distributions made within the relevant
period referred to above to holders of Common Stock to the extent such other
dividends and distributions were not previously included in the calculation of
an adjustment pursuant to the first paragraph of Section 6.4(d) hereof within
such period.
2.23 ''Fair Market Value'' shall mean the average of the daily Current Market
Prices of the security in question during the five (5) consecutive Trading Days
before the earlier of the day in question and the ''ex'' date with respect to
the issuance or distribution requiring such computation. The term '' 'ex'
date,'' when used with respect to any issuance or distribution, means the first
day on which the Common Stock trades regular way, without the right to receive
such issuance or distribution, on the exchange or in the market, as the case may
be, used to determine that day's Current Market Price. With respect to any asset
or security for which there is no Current Market Price, the Fair Market Value of
such asset or security shall be determined in good faith by the Board of
Directors.
2.24 ''Issue Date'' shall mean the first date on which shares of Class 2 ESOP
Preferred Stock are issued.
2.25 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.26 ''Measuring Date'' shall mean that date which is the 365th day following
the Issue Date.
2.27 ''Non-Dilutive Amount'' in respect of an issuance, sale or exchange by
the Corporation of any Equity Securities (other than Common Stock) shall mean
the excess of (i) the product of the Fair Market Value of a share of Common
Stock on the day preceding the first public announcement of such issuance, sale
or exchange multiplied by the maximum number of shares of Common Stock which
could be acquired on such date upon the exercise, conversion or exchange in full
of such Equity Securities (and any Equity Securities receivable upon exercise,
conversion or exchange thereof), whether or not then exercisable, convertible or
exchangeable at such date, over (ii) the aggregate amount payable pursuant to
the exercise, conversion or exchange of such Equity Securities, whether or not
then exercisable, convertible or exchangeable, to purchase or acquire such
maximum number of shares of Common Stock (and any Equity Securities receivable
upon exercise, conversion or exchange thereof); provided, however, that in no
event shall the Non-Dilutive Amount be less than zero. For purposes of the
foregoing sentence, the amount payable pursuant to the exercise, conversion or
exchange of such Equity Securities to purchase or acquire shares of Common Stock
shall be deemed to be the Fair Market Value of the consideration payable
pursuant to the exercise, conversion or exchange of such Equity Securities on
the date of the issuance, sale or exchange of such Equity Securities by the
Corporation (excluding for that purpose the Fair Market Value of the Equity
Security to be so exercised, converted or exchanged).
2.28 ''Pro Rata Repurchase'' shall mean any purchase of shares of Common Stock
by the Corporation or any Affiliate thereof, whether for cash, shares of capital
stock of the Corporation, other securities of the Corporation, evidences of
indebtedness of the Corporation or any other person or any other property
(including, without limitation, shares of capital stock, other securities or
evidences of indebtedness of a subsidiary of the Corporation),
44
or any combination thereof, effected while any of the shares of Class 2 ESOP
Preferred Stock are outstanding, pursuant to any tender offer or exchange offer
subject to Section 13(e) of the Securities Exchange Act of 1934, as amended (the
''Exchange Act''), or any successor provision of law, or pursuant to any other
offer available to substantially all holders of Common Stock; provided, however,
that ''Pro Rata Repurchase'' shall not include any purchase of shares by the
Corporation or any subsidiary thereof made in open market transactions
substantially in accordance with the requirements of Rule 10b-18 as in effect
under the Exchange Act or on such other terms and conditions as the Board of
Directors shall have determined are reasonably designed to prevent such
purchases from having a material effect on the trading market for the Common
Stock. The ''Effective Date'' of a Pro Rata Repurchase shall mean the date of
acceptance of shares for purchase or exchange under any tender or exchange offer
which is a Pro Rata Repurchase or the date of purchase with respect to any Pro
Rata Repurchase that is not a tender or exchange offer.
2.29 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.30 ''Rights'' shall mean the rights of the Corporation issued or issuable
under the Corporation's Rights Agreement dated as of December 11, 1986, and as
amended from time to time (the ''Rights Agreement''), or rights to purchase any
capital stock of the Corporation issued or issuable under any successor
shareholder rights plan or plans adopted in replacement of the Rights Agreement.
2.31 ''Series A Debentures'' shall mean the Series A Debentures due 2004 of
United Air Lines, Inc.
2.32 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.33 ''Series B Debentures'' shall mean the Series B Debentures due 2014 of
United Air Lines, Inc.
2.34 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.35 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.36 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.37 [Reserved]
2.38 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class 2 ESOP
Preferred Stock as to the payment of dividends or distributions are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then ''set apart for payment'' with respect to the Class 2
ESOP Preferred Stock shall mean, with respect to such dividends or
distributions, placing such funds in a separate account or delivering such funds
to a disbursing, paying or other similar agent.
2.39 ''Trading Day'' shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading or quoted on the NYSE, on the principal national securities exchange on
which such securities are listed or admitted, or if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market, or if such securities are not quoted on such National Market, in the
applicable securities market in which the securities are traded.
45
2.40 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class 2 ESOP Preferred Stock.
2.41 ''Voting Preferred Stocks'' shall mean collectively, the Class M Voting
Preferred Stock, the Class P Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends.
3.1 The holders of shares of the Class 2 ESOP Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
assets legally available for that purpose, dividends payable in cash at the rate
(per outstanding share of Common Stock) equal to the dividends which would have
been received during the applicable Dividend Period with respect to the shares
of Common Stock which would have been issued upon conversion of the Class 2 ESOP
Preferred Stock had the Class 2 ESOP Preferred Stock been outstanding as Common
Stock at each relevant time in order to receive such dividends (but only to the
extent such dividends do not constitute an Extraordinary Distribution under
clause (i) of the definition thereof), which dividends (hereinafter referred to
as ''Participating Dividends'') shall be paid in cash, pro-rata to each holder
of Class 2 ESOP Preferred Stock. Such Participating Dividends shall be
cumulative from the Issue Date, whether or not in any Dividend Period or Periods
there shall be assets of the Corporation legally available for the payment of
such Participating Dividends and whether or not the Board of Directors shall
have declared such Participating Dividends, and shall be payable annually
(except as otherwise provided herein) when, as and if declared by the Board of
Directors, in arrears on Dividend Payment Dates, commencing on the penultimate
Business Day of 1994. Each such Participating Dividend shall be payable in
arrears to the holders of record of shares of the Class 2 ESOP Preferred Stock,
as they appear on the stock records of the Corporation at the close of business
on such record dates, which shall not be more than 60 days nor less than 10 days
preceding the Dividend Payment Dates thereof, as shall be fixed by the Board of
Directors. Accrued and unpaid Participating Dividends for any past Dividend
Periods may be declared and paid at any time, without reference to any Dividend
Payment Date, to holders of record on such date, not exceeding 45 days preceding
the payment date thereof, as may be fixed by the Board of Directors. Holders of
the Class 2 ESOP Preferred Stock shall be entitled to the cumulative
Participating Dividend provided in this Section 3.1 and shall not be entitled to
any other dividends in excess thereof. In the event that an adjustment is made
pursuant to the second paragraph of Section 6.4(d) with respect to shares of
Class 2 ESOP Preferred Stock converted during the applicable Dividend Period,
the amount of Participating Dividend to be paid in accordance with the preceding
sentence shall be reduced by an amount equal to the product of (x) the number of
shares of Common Stock into which such converted shares of Class 2 ESOP
Preferred Stock would have been converted in the absence of such adjustment and
(y) the amount of the cash dividend or distributions per share of Common Stock
in respect of which such adjustment was made.
3.2 Except as provided in Section 3.1, holders of shares of Class 2 ESOP
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of cumulative Participating Dividends, as herein
provided, on the Class 2 ESOP Preferred Stock. No interest, or sum of money in
lieu of interest, shall be payable in respect of any Participating Dividend
payment or payments on the Class 2 ESOP Preferred Stock that may be in arrears.
3.3 So long as any shares of the Class 2 ESOP Preferred Stock are outstanding,
no dividends, except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on any other class or series of stock
of the Corporation ranking on a parity with the Class 2 ESOP Preferred Stock as
to the payment of dividends for any period unless full cumulative Participating
Dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Class 2
ESOP Preferred Stock for all Dividend Periods terminating on or prior to the
date of payment of the dividends on such class or series of parity stock. When
Participating Dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends declared upon the Class 2
ESOP Preferred Stock and such parity stock shall be declared ratably in
proportion to the respective amounts of Participating Dividends accumulated and
unpaid on the Class 2 ESOP Preferred Stock and dividends accumulated and unpaid
on such parity stock.
46
3.4 So long as any shares of the Class 2 ESOP Preferred Stock are outstanding,
no dividends (other than (i) the Rights and (ii) dividends or distributions paid
in shares of, or options, warrants, or rights to subscribe for or purchase
shares of, any class or series of stock of the Corporation that is junior to the
Class 2 ESOP Preferred Stock as to the payment of dividends) shall be declared
or paid or set apart for payment or other distribution declared or made upon any
class or series of stock of the Corporation that is junior to the Class 2 ESOP
Preferred Stock as to the payment of dividends, nor shall any other class or
series of stock of the Corporation ranking on a parity with or junior to the
Class 2 ESOP Preferred Stock as to the payment of dividends or as to
distributions upon liquidation, dissolution or winding up of the Corporation, be
redeemed, purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of shares of Common Stock made for purposes of an employee
incentive or benefit plan of the Corporation or any subsidiary) for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for any class or series of
stock of the Corporation that is junior to the Class 2 ESOP Preferred Stock as
to the payment of dividends and as to distributions upon liquidation,
dissolution or winding up of the Corporation), unless in each case the full
cumulative Participating Dividends on all outstanding shares of the Class 2 ESOP
Preferred Stock shall have been paid or set apart for payment for all past
Dividend Periods with respect to the Class 2 ESOP Preferred Stock and such
parity stock.
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class 2 ESOP Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class 2 ESOP Preferred Stock shall be entitled to
receive an amount per share of Class 2 ESOP Preferred Stock equal to the sum of
(a) the result of dividing (i) the Purchase Price (as defined in and determined
pursuant to Section 1 of the Preferred Stock Purchase Agreement, dated as of
March 25, 1994, as amended, between the Corporation and State Street Bank and
Trust Company as trustee for the UAL Corporation Employee Stock Ownership Plan
Trust (the ''Agreement''), a copy of which is on file in the office of the
Secretary of the Corporation) of the shares of Class 1 ESOP Preferred Stock
purchased pursuant to Section 1 of the Agreement by (ii) the number of shares of
Class 1 ESOP Preferred Stock purchased pursuant to Section 1 of the Agreement
and (b) an amount equal to all dividends (whether or not earned or declared)
accrued and unpaid thereon to the date of final distribution to such holders
(collectively, the ''Liquidation Preference''), but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of Class 2 ESOP Preferred
Stock shall be insufficient to pay in full the Liquidation Preference and the
liquidation preference on all other shares of any class or series of stock of
the Corporation that ranks on a parity with the Class 2 ESOP Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof, shall be distributed
among the holders of shares of Class 2 ESOP Preferred Stock and any such other
parity stock ratably in accordance with the respective amounts that would be
payable on such shares of Class 2 ESOP Preferred Stock and any such other parity
stock if all amounts payable thereon were paid in full. For the purposes of this
Section 4, (i) a consolidation or merger of the Corporation with or into one or
more corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any class or series of
stock ranking prior to or on a parity with the Class 2 ESOP Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holders of the Class 2
ESOP Preferred Stock, as and to the fullest extent provided in this Section 4,
any other class or series of stock of the Corporation that ranks junior to the
Class 2 ESOP Preferred Stock as to amounts distributable upon dissolution,
liquidation or winding up of the Corporation shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the Class 2
ESOP Preferred Stock shall not be entitled to share therein.
47
Section 5. Shares to be Retired. All shares of Class 2 ESOP Preferred
Stock which shall have been issued and reacquired in any manner by the
Corporation shall be retired and shall not be reissued.
Section 6. Conversion. Holders of shares of Class 2 ESOP Preferred Stock
shall have the right to convert all or a portion of such shares into shares of
Common Stock as follows:
6.1 Subject to and upon compliance with the provisions of this Section 6, a
holder of shares of Class 2 ESOP Preferred Stock shall have the right, at such
holder's option, at any time and from time to time, to convert all or any of
such shares into fully paid and nonassessable shares of Common Stock at a rate
of one share of Common Stock for one share of Class 2 ESOP Preferred Stock,
subject to adjustment as provided in this Section 6 (as so adjusted, the
''Conversion Rate'') by surrendering such shares to be converted, such surrender
to be made in the manner provided in Section 6.2. Certificates shall be issued
for the remaining shares of Class 2 ESOP Preferred Stock if fewer than all of
the shares of Class 2 ESOP Preferred Stock represented by a certificate are
converted.
6.2 In order to exercise the conversion right, the holder of shares of Class 2
ESOP Preferred Stock to be converted shall surrender the certificate or
certificates representing such shares, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent in the Borough of
Manhattan, City of New York, accompanied by written notice to the Corporation
that the holder thereof elects to convert Class 2 ESOP Preferred Stock. Unless
the shares issuable on conversion are to be issued in the same name as the name
in which such share of Class 2 ESOP Preferred Stock is registered, each share
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid or that no such taxes are payable).
Holders of shares of Class 2 ESOP Preferred Stock at the close of business on
a dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date. The Corporation
shall make no payment or allowance for unpaid dividends on the shares of Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for shares of
Class 2 ESOP Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on such holder's written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 6, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in Section 6.3.
Each conversion shall be deemed to have been effected immediately prior to the
close of business on the date on which the certificates for shares of Class 2
ESOP Preferred Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend payable on such shares)
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Rate in effect at such time on
such date, unless the stock transfer books of the Corporation shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Rate in effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
6.3 No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon conversion of the Class 2 ESOP Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Class 2 ESOP
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than one certificate shall
be surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion
48
thereof shall be computed on the basis of the aggregate number of shares of
Class 2 ESOP Preferred Stock so surrendered.
6.4 The Conversion Rate shall be adjusted from time to time as follows:
(a) In case the Corporation shall, at any time or from time to time while any
of the shares of Class 2 ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution on its capital stock in shares of its Common
Stock, (ii) subdivide its outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number of
shares or (iv) issue any shares of capital stock by reclassification of its
Common Stock, the Conversion Rate in effect at the opening of business on the
day next following the date fixed for the determination of stockholders entitled
to receive such dividend or distribution or at the opening of business on the
day next following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any share of Class 2 ESOP Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock or other capital stock that such holder would have owned or have
been entitled to receive after the happening of any of the events described
above had such share been converted immediately prior to the record date in the
case of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made pursuant to
this subparagraph (a) shall become effective immediately after the opening of
business on the day next following the record date (except as provided in
Section 6.7 below) in the case of a dividend or distribution and shall become
effective immediately after the opening of business on the day next following
the effective date in the case of a subdivision, combination or
reclassification.
(b) In case the Corporation shall, at any time or from time to time while any
of the shares of Class 2 ESOP Preferred Stock are outstanding, issue Equity
Securities (other than Common Stock and the Rights) (the ''Issued Equity
Securities'') to all holders of shares of its Common Stock entitling them (for a
period expiring within 45 days after the record date for such issuance) to
subscribe for or purchase (whether by exercise, conversion, exchange or
otherwise) shares of Common Stock (or other Equity Securities) at a price per
share less than the Fair Market Value of the Common Stock (or the other Equity
Security to be acquired) at such record date (treating the price per share of
the Equity Securities to be acquired as equal to (x) the sum of (i) the Fair
Market Value of the consideration payable for a unit of the Equity Security plus
(ii) the Fair Market Value of any additional consideration initially payable
upon the exercise, conversion or exchange of such security into Common Stock
divided by (y) the number of shares of Common Stock initially underlying or that
may be acquired upon the exercise, conversion or exchange of such Equity
Security), the Conversion Rate shall be adjusted so that it shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior to the
date of issuance of such Issued Equity Securities by a fraction, the numerator
of which shall be the sum of (A) the number of shares of Common Stock
outstanding on the date of issuance of such Issued Equity Securities plus (B)
the number of additional shares of Common Stock offered for subscription or
purchase (including, without limitation, the security underlying or that may be
acquired upon the exercise, conversion or exchange of the Equity Securities so
offered) and the denominator of which shall be the sum of (A) the number of
shares of Common Stock outstanding on the date of issuance of such Issued Equity
Securities plus (B) the number of shares of Common Stock that the aggregate
offering price of the total number of shares so offered for subscription or
purchase (including, without limitation, the Fair Market Value of the
consideration payable for a unit of the Equity Securities so offered plus the
Fair Market Value of any additional consideration payable upon exercise,
conversion or exchange of such Equity Securities) would purchase at such Fair
Market Value of the Common Stock as of the record date for such issuance. Such
adjustment shall become effective as of the record date for the determination of
stockholders entitled to receive such Issued Equity Securities (except as
provided in Section 6.6 below).
(c) In case the Corporation shall, at any time or from time to time while any
of the shares of Class 2 ESOP Preferred Stock are outstanding, issue, sell or
exchange shares of Common Stock (other than pursuant to any Rights, Equity
Securities issued in connection with any employee or director incentive or
benefit plan or arrangement of the Corporation or any subsidiary or any Equity
Security theretofore outstanding entitling the holder to purchase or acquire
shares of Common Stock) for a consideration having a Fair Market Value on the
date of such issuance, sale or exchange less than the Fair Market Value of such
shares of Common Stock on the date of such issuance, sale or exchange, then the
Conversion Rate in effect immediately prior to such issuance, sale or exchange
shall be adjusted
49
by multiplying such Conversion Rate by a fraction, the numerator of which shall
be the product of (i) the Fair Market Value of a share of Common Stock on the
Trading Day immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (ii) the sum of the number of shares of
Common Stock outstanding on such day plus the number of shares of Common Stock
so issued, sold or exchanged by the Corporation, and the denominator of which
shall be the sum of (i) the Fair Market Value of all the shares of Common Stock
outstanding on the Trading Day immediately preceding the first public
announcement of such issuance, sale or exchange plus (ii) the Fair Market Value
of the consideration received by the Corporation in respect of such issuance,
sale or exchange of shares of Common Stock. In case the Corporation shall, at
any time or from time to time while any of the shares of Class 2 ESOP Preferred
Stock are outstanding, issue, sell or exchange any Equity Security (other than
any Rights, Equity Securities issued in connection with any employee or director
incentive or benefit plan or arrangement of the Corporation or any subsidiary or
Common Stock) other than any such issuance to all holders of shares of Common
Stock as a dividend or distribution (including by way of a reclassification of
shares or a recapitalization of the Corporation) for a consideration having a
Fair Market Value on the date of such issuance, sale or exchange less than the
Non-Dilutive Amount, then the Conversion Rate shall be adjusted by multiplying
such Conversion Rate by a fraction, the numerator of which shall be the product
of (i) the Fair Market Value of a share of Common Stock on the Trading Day
immediately preceding the first public announcement of such issuance, sale or
exchange multiplied by (ii) the sum of the number of shares of Common Stock
outstanding on such day plus the maximum number of shares of Common Stock
underlying or which could be acquired pursuant to such Equity Security at the
time of the issuance, sale or exchange of such Equity Security (assuming shares
of Common Stock could be acquired pursuant to such Equity Security at such
time), and the denominator of which shall be the sum of (i) the Fair Market
Value of all the shares of Common Stock outstanding on the Trading Day
immediately preceding the first public announcement of such issuance, sale or
exchange plus (ii) the Fair Market Value of the consideration received by the
Corporation in respect of such issuance, sale or exchange of such Equity
Security plus (iii) the Fair Market Value as of the time of such issuance of the
consideration which the Corporation would receive upon exercise, conversion or
exchange in full of all such Equity Securities.
(d) In case the Corporation shall, at any time or from time to time while any
of the shares of Class 2 ESOP Preferred Stock are outstanding, make an
Extraordinary Distribution in respect of the Common Stock or effect a Pro Rata
Repurchase of Common Stock, the Conversion Rate in effect immediately prior to
such Extraordinary Distribution or Pro Rata Repurchase shall be adjusted by
multiplying such Conversion Rate by a fraction, the numerator of which shall be
the product of (i) the number of shares of Common Stock outstanding immediately
before such Extraordinary Dividend or Pro Rata Repurchase (minus, in the case of
a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the
Corporation) multiplied by (ii) the Fair Market Value of a share of Common Stock
on the record date with respect to such Extraordinary Distribution or on the
Trading Day immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect a Pro Rata
Repurchase, as the case may be, and the denominator of which shall be (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase multiplied by (y)
the Fair Market Value of a share of Common Stock on the record date with respect
to such Extraordinary Distribution, or on the Trading Day immediately preceding
the first public announcement by the Corporation or any of its Affiliates of the
intent to effect a Pro Rata Repurchase, as the case may be, minus (ii) the Fair
Market Value of the Extraordinary Distribution or the aggregate purchase price
of the Pro Rata Repurchase, as the case may be (provided that such denominator
shall never be less than 1.0); provided, however, that no Pro Rata Repurchase
shall cause an adjustment to the Conversion Rate unless the amount of all cash
dividends and distributions made to holders of Common Stock during the period
from the latest to occur of the Issue Date or the most recent Dividend Payment
Date preceding the Effective Date of such Pro Rata Repurchase, when combined
with the aggregate amount of all Pro Rata Repurchases, including such Pro Rata
Repurchase (for all purposes of this Section 7.4(d), including only that portion
of the Fair Market Value of the aggregate purchase price of each Pro Rata
Repurchase which is in excess of the Fair Market Value of the Common Stock
repurchased as determined on the Trading Day immediately preceding the first
public announcement by the Corporation or any of its Affiliates of the intent to
effect each such Pro Rata Repurchase), the Effective Dates of which fall within
such period, exceeds twelve and one-half percent (12-1/2%) of the aggregate Fair
Market Value of all shares of Common Stock outstanding on the Trading Day
immediately preceding the first public announcement by the Corporation or any of
50
its Affiliates of the intent to effect such Pro Rata Repurchase. Such adjustment
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such Extraordinary Distribution or
immediately after the Effective Date of such Pro Rata Repurchase.
Solely as an adjustment applicable to shares of Class 2 ESOP Preferred Stock
that are being converted into Common Stock as of a given date, and not as a
permanent adjustment to the Conversion Rate, the Conversion Rate in effect
immediately prior to such conversion shall be adjusted by multiplying such
Conversion Rate by a fraction, the numerator of which shall be the product of
(i) the number of shares of Common Stock outstanding immediately before such
conversion multiplied by (ii) the Fair Market Value of a share of Common Stock
on the date of such conversion, and the denominator of which shall be (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such conversion multiplied by (y) the Fair Market Value of a share of
Common Stock on the date of such conversion minus (ii) the Fair Market Value of
the cash dividends and distributions made on or before the date of such
conversion with a record date after the later of the Issue Date or the most
recent Dividend Payment Date upon which Participating Dividends were paid in
full, but only to the extent that such cash dividends and distributions (a)
would entitle the holders of the shares of Class 2 ESOP Preferred Stock
outstanding on such conversion date to a dividend under Section 3.1 that has not
been paid and (b) would not constitute an Extraordinary Distribution (provided
that such denominator shall never be less than 1.0).
(e) No adjustment in the Conversion Rate shall be required unless such
adjustment would require a cumulative increase or decrease of at least 0.01% in
such rate; provided that any adjustments that by reason of this subparagraph (e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment until made; and provided further that any adjustment
shall be required and made in accordance with the provisions of this Section 6.4
(other than this subparagraph (e)) not later than such time as may be required
in order to preserve the taxfree nature of a distribution to the holders of
shares of Common Stock. Notwithstanding any other provisions of this Section 6,
the Corporation shall not be required to make any adjustments of the Conversion
Rate for the issuance of any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends on securities of the Corporation so
long as the holders of the Class 2 ESOP Preferred Stock shall be entitled to
participate therein on substantially the same terms as holders of Common Stock.
All calculations under this Section 6 shall be made to the nearest cent (with
$.005 being rounded upward), one-tenth of a share (with .05 of a share being
rounded upward) or, in the case of the Conversion Rate, one hundred millionth of
a share (with .000000005 being rounded upward), as the case may be. Anything in
this Section 6.4 to the contrary notwithstanding, the Corporation shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Rate, in addition to those required by this Section 6.4, as it in its
discretion shall determine to be advisable in order that any stock dividends,
subdivision of shares, reclassification or combination of shares, distribu tion
of rights or warrants to purchase stock or securities, or a distribution of
other assets (other than cash dividends) hereafter made by the Corporation to
its stockholders shall not be taxable.
6.5 If:
(a) the Corporation shall declare a dividend or any other distribution on the
Common Stock (other than the Rights); or
(b) the Corporation shall authorize the granting to the holders of the Common
Stock of Equity Securities (other than Common Stock) to subscribe for or
purchase any Equity Security; or
(c) there shall be any reclassification of the Common Stock (other than an
event to which Section 6.4(a) applies) or any consolidation or merger to which
the Corporation is a party and for which approval of any stockholders of the
Corporation is required, or the sale or transfer of all or substantially all of
the assets of the Corporation as an entirety; or
(d) there shall occur the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; or
(e) there shall occur any Pro Rata Repurchase,
51
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of shares of the Class 2 ESOP Preferred Stock
at their addresses as shown on the stock records of the Corporation, as promptly
as possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of Equity Securities, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or granting of Equity
Securities are to be determined, (B) the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up or (C) the number of shares subject to such offer for
a Pro Rata Repurchase and the purchase price payable by the Corporation pursuant
to such offer. Failure to give or receive such notice or any defect therein
shall not affect the legality or validity of the proceedings described in this
Section 6.
6.6 Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring and the manner of effecting such
adjustment which certificate shall be prima facie evidence of the correctness of
such adjustment. Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion Rate setting forth
the adjusted Conversion Rate and the effective date of such adjustment or
adjustments and shall mail such notice of such adjustment or adjustments to the
holder of each share of Class 2 ESOP Preferred Stock at such holder's last
address as shown on the stock records of the Corporation.
6.7 In any case in which Section 6.4 provides that an adjustment shall become
effective on the day next following a record date for an event, the Corporation
may defer until the occurrence of such event (A) issuing to the holder of any
share of Class 2 ESOP Preferred Stock converted after such record date and
before the occurrence of such event the additional shares of Common Stock or
other securities issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock or other securities
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of any fraction pursuant to
Section 6.3.
6.8 For purposes of this Section 6, the number of shares of Common Stock at
any time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of the Corporation or any subsidiary. The Corporation
shall not pay a dividend or make any distribution on shares of Common Stock held
in the treasury of the Corporation.
6.9 There shall be no adjustment of the Conversion Rate in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in Section 6 or
Section 7. If any action or transaction would require adjustment of the
Conversion Rate pursuant to more than one paragraph of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
6.10 If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 6, that in the opinion of the Board
of Directors would materially adversely affect the conversion rights of the
holders of the shares of Class 2 ESOP Preferred Stock, the Conversion Rate for
the Class 2 ESOP Preferred Stock may be adjusted, to the extent permitted by
law, in such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
6.11 The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Class 2
ESOP Preferred Stock, the full number of shares of Common Stock deliverable upon
the conversion of all outstanding shares of Class 2 ESOP Preferred Stock not
theretofore converted. For purposes of this Section 6.11, the number of shares
of Common
52
Stock that shall be deliverable upon the conversion of all outstanding shares of
Class 2 ESOP Preferred Stock shall be computed as if at the time of computation
all such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the Class 2 ESOP Preferred Stock shall be validly issued, fully
paid and non-assessable.
The Corporation shall endeavor to list the shares of Common Stock (or other
securities) required to be delivered upon conversion of the Class 2 ESOP
Preferred Stock, prior to such delivery, upon each national securities exchange,
if any, upon which the outstanding Common Stock (or other securities) is listed
at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Class 2 ESOP Preferred Stock, the
Corporation shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
6.12 The Corporation shall pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the Class 2 ESOP
Preferred Stock pursuant hereto; provided that the Corporation shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the Class 2 ESOP Preferred
Stock to be converted and no such issue or delivery shall be made unless and
until the person requesting any such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
6.13 If, prior to the Distribution Date (as defined for purposes of the
Rights), the Corporation shall issue shares of Common Stock upon conversion of
shares of Class 2 ESOP Preferred Stock as contemplated by this Section 6, the
Corporation shall issue together with each such share of Common Stock that
number of Rights as are then issuable, pursuant to the Rights Agreement (or any
successor rights plan or plans adopted in replacement of the Rights Agreement),
per share of such Common Stock so issued, but only if at such time such Rights
or rights are, pursuant to the relevant rights agreement, to be represented by
certificates representing shares of Common Stock and have not expired.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any consolidation, merger, share
exchange or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged solely for or changed,
reclassified or converted solely into stock of any successor or resulting or
other company (including the Corporation) that constitutes ''qualifying employer
securities'' with respect to holders of Class 2 ESOP Preferred Stock within the
meaning of Section 409(l) of the Code and Section 407(d)(5) of the Employee
Retirement Income Security Act of 1974, as amended, or any successor provisions
of law, and, if applicable, for a cash payment in lieu of fractional shares, if
any, proper provisions shall be made so that upon consummation of such
transaction, the shares of Class 2 ESOP Preferred Stock shall be converted into
or exchanged for preferred stock of such successor or resulting or other
company, having in respect of such company, the same powers, preferences and
relative, participating, optional or other special rights (including the rights
provided by this Section 7), and the qualifications, limitations or restrictions
thereof, that the Class 2 ESOP Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction, except that after such
transaction each share of preferred stock of the surviving or resulting or other
company so received in such transaction upon conversion or exchange of the Class
2 ESOP Preferred Stock shall be convertible, otherwise on the terms and
conditions provided by Section 6 hereof, into the number and kind of
''qualifying employer securities'' receivable in such transaction by a holder of
the number of shares of Common Stock into which a share of Class 2 ESOP
Preferred Stock could have been converted immediately prior to such transaction;
provided, however, that if by virtue of the structure of such transaction, a
holder of Common Stock is required to make an election with respect to the
nature and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holders of the Class 2 ESOP
53
Preferred Stock, then the shares of preferred stock of the surviving or
resulting or other company received in such transaction upon conversion or
exchange of Class 2 ESOP Preferred Stock shall, by virtue of such transaction
and on the same terms as apply to the holders of Common Stock, be convertible
into or exchangeable solely for ''qualifying employer securities'' (together, if
applicable, with a cash payment in lieu of fractional shares) with the effect
provided above on the basis of the number and kind of qualifying employer
securities receivable in such transaction by a holder of the number of shares of
Common Stock into which such shares of Class 2 ESOP Preferred Stock could have
been converted immediately prior to such transaction (provided that if the kind
or amount of qualifying employer securities receivable in such transaction is
not the same for each such share of Common Stock, then the kind and amount so
receivable in such transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per share by the
plurality of such shares of Common Stock). The rights of the preferred stock of
such successor or resulting or other company so received in such transaction
upon conversion or exchange of the Class 2 ESOP Preferred Stock shall
successively be subject to adjustments pursuant to Section 6 hereof following
such transaction as nearly equivalent to the adjustments provided for by such
Sections prior to such transaction.
7.2 In case the Corporation shall enter into any consolidation, merger, share
exchange or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged for or changed,
reclassified or converted into other stock or securities or cash or any other
property, or any combination thereof, other than any such consideration which is
constituted solely of ''qualifying employer securities'' (as referred to in
Section 7.1) and cash payments, if applicable, in lieu of fractional shares,
proper provisions shall be made so that upon consummation of such transaction
the outstanding shares of Class 2 ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as are applicable to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable by holders
of the number of shares of Common Stock into which such shares of Class 2 ESOP
Preferred Stock could have been converted immediately prior to such transaction;
provided, however, that if by virtue of the structure of such transaction, a
holder of Common Stock is required to make an election with respect to the
nature and kind of consideration to be received in such transaction, which
election cannot practicably be made by holders of the Class 2 ESOP Preferred
Stock, then the shares of Class 2 ESOP Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of stock, securities, cash
or other property (payable in kind) receivable by a holder of the number of
shares of Common Stock into which such shares of Class 2 ESOP Preferred Stock
could have been converted immediately prior to such transaction if such holder
of Common Stock failed to exercise any rights of election to receive any kind or
amount of stock, securities, cash or other property receivable in such
transaction (provided that if the kind or amount of stock, securities, cash or
other property receivable in such transaction are not the same for each non-
electing share, then the kind and amount of stock, securities, cash or other
property so receivable upon such transaction for each non-electing share shall
be the kind and amount so receivable per share by the plurality of the non-
electing shares).
7.3 In case the Corporation shall enter into any agreement providing for any
consolidation, merger, share exchange or similar transaction described in this
Section 7, then the Corporation shall as soon as practicable thereafter (and in
any event at least fifteen (15) Business Days before consummation of such
transaction) give notice of such agreement and the material terms thereof to
each holder of Class 2 ESOP Preferred Stock. The Corporation shall not
consummate any consolidation, merger, share exchange or similar transaction
unless all of the terms of this Section 7 have been complied with.
Section 8. Ranking.
8.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Class 2 ESOP Preferred Stock, as to the payment of
dividends or as to distributions of assets upon liquidation, dissolution or
winding up, as the case may be, if the holders of such class or series shall
be entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class 2 ESOP Preferred Stock;
54
(b) on a parity with the Class 2 ESOP Preferred Stock as to the payment of
dividends, whether or not the dividend rates or dividend payment dates thereof
be different from those of the Class 2 ESOP Preferred Stock, if the holders of
such class or series of stock and the Class 2 ESOP Preferred Stock shall be
entitled to the receipt of dividends in proportion to their respective amounts
of accrued and unpaid dividends per share, without preference or priority one
over the other, and on a parity with the Class 2 ESOP Preferred Stock as to
the distribution of assets upon liquidation, dissolution or winding up,
whether or not the liquidation prices per share thereof be different from
those of the Class 2 ESOP Preferred Stock, if the holder of such class or
series of stock and the Class 2 ESOP Preferred Stock shall be entitled to the
receipt of amounts distributable upon liquidation, dissolution or winding up
in proportion to their respective liquidation preferences, without preference
or priority one over the other; and
(c) junior to the Class 2 ESOP Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, as the case may be, if the holders of Class 2 ESOP Preferred Stock
shall be entitled to receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of such class or series.
8.2 The Series A Preferred Stock and the Series B Preferred Stock, shall each
be deemed to rank prior to the Class 2 ESOP Preferred Stock both as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up. The Series D Preferred Stock shall be deemed to rank
prior to the Class 2 ESOP Preferred Stock as to the distribution of assets upon
liquidation, dissolution or winding up. The Class 1 ESOP Preferred Stock shall
be deemed to rank on a parity with the Class 2 ESOP Preferred Stock as to the
payment of Participating Dividends and as to amounts distributable upon
liquidation, dissolution or winding up and the Class 1 ESOP Preferred Stock
shall be deemed to rank prior to the Class 2 ESOP Preferred Stock with respect
to the payment of Fixed Dividends (as such term is defined in Article FOURTH,
Part II of this Restated Certificate) on the Class 1 ESOP Preferred Stock. The
Common Stock, the Director Preferred Stocks, the Voting Preferred Stocks and the
Series C Preferred Stock shall each be deemed to rank junior to the Class 2 ESOP
Preferred Stock both as to the payment of dividends and as to the distribution
of assets upon liquidation, dissolution or winding up.
Section 9. Voting. The holders of shares of Class 2 ESOP Preferred Stock
shall have the following voting rights:
9.1 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class 2 ESOP Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote required by law or this
Restated Certificate, the affirmative vote or written consent of the holders of
at least a majority of all of the outstanding shares of Class 2 ESOP Preferred
Stock, voting separately as a class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal (including any
amendment, alteration or repeal by operation of merger or consolidation) of any
of the provisions of this Restated Certificate or of any certificate amendatory
thereof or supplemental thereto (including any Certificate of Designation,
Preferences and Rights or any similar document relating to any series of Serial
Preferred Stock) that would adversely affect the preferences, rights, powers or
privileges of the Class 2 ESOP Preferred Stock; provided, however, that the
amendment of the provisions of this Restated Certificate so as to authorize or
create, or to increase the authorized amount of, any class or series of stock of
the Corporation ranking on a parity with or junior to the Class 2 ESOP Preferred
Stock both as to the payment of dividends and as to the distribution of assets
upon liquidation, dissolution or winding up of the Corporation shall not be
deemed to adversely affect the preferences, rights, powers or privileges of
Class 2 ESOP Preferred Stock.
9.2 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class 2 ESOP Voting Preferred Stock shall then be required by law
or this Restated Certificate, and in addition to any other vote required by law
or this Restated Certificate, the affirmative vote or written consent of the
holders of at least a majority of all of the outstanding shares of Class 2 ESOP
Preferred Stock, voting separately as a class, shall be necessary for
authorizing, effecting or validating the creation, authorization or issuance of
any shares of any class or series of stock of the Corporation ranking prior to
the Class 2 ESOP Preferred Stock either as to payment of dividends or as to
distributions upon liquidation, dissolution or winding up, or the
reclassification of any authorized stock of the
55
Corporation into any such prior shares, or the creation, authorization or
issuance of any obligation or security convertible into or evidencing the right
to purchase any such prior shares.
9.3 For purposes of the foregoing provisions of Sections 9.1 and 9.2, each
share of Class 2 ESOP Preferred Stock shall have one (1) vote per share. Except
as otherwise required by applicable law or as set forth herein, the shares of
Class 2 ESOP Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers and the consent of the
holders thereof shall not be required for the taking of any corporate action.
Section 10. No Redemption. The Class 2 ESOP Preferred Stock shall not be
redeemable in whole or in part.
Section 11. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of any shares
of Class 2 ESOP Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
PART IV
Class P ESOP Voting Junior Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part IV to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part IV.
Section 1. Number of Shares; Designation; Issuances; Automatic Conversion.
1.1 The Class P ESOP Voting Junior Preferred Stock of the Corporation (the
''Class P Voting Preferred Stock'') shall consist of 11,600,000 shares, par
value $0.01 per share.
1.2 Shares of Class P Voting Preferred Stock shall be issued only to a trustee
or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership
Plan (the ''ESOP''), (ii) the UAL Corporation Supplemental ESOP (the
''Supplemental ESOP'') or (iii) any other employee stock ownership trust or plan
or other employee benefit plan of the Corporation or any of its subsidiaries
(each, a ''Plan''). In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other realization upon
shares of Class P Voting Preferred Stock pledged as security for any loan or
loans made to a Plan or to the trustee or the trustees acting on behalf of a
Plan) (hereinafter a ''transfer'') of shares of Class P Voting Preferred Stock
to any person (including, without limitation, any participant in a Plan) other
than (x) any Plan or trustee or trustees of a Plan or (y) any pledgee of such
shares acquiring such shares as security for any loan or loans made to the Plan
or to any trustee or trustees acting on behalf of the Plan, the shares of Class
P Voting Preferred Stock so transferred, upon such transfer and without any
further action by the Corporation or the holder, shall be automatically
converted into shares of Common Stock at the applicable Conversion Rate in
accordance with Section 9 hereof and thereafter such transferee shall not have
any of the voting powers, preferences or relative, participating, optional or
special rights ascribed to shares of Class P Voting Preferred Stock hereunder,
but, rather, shall have only the powers and rights pertaining to the Common
Stock into which such shares of Class P Voting Preferred Stock shall be so
converted. In the event of any such automatic conversion provided for in this
Section 1.2, such transferee shall be treated for all purposes as the record
holder of the shares of Common Stock into which the Class P Voting Preferred
Stock shall have been converted as of the date of such conversion. Certificates
representing shares of Class P Voting Preferred Stock shall be legended to
reflect such consequences of a transfer. The shares of Common Stock issued upon
any conversion in accordance with Section 9 hereof or this Section 1.2 may be
transferred by the holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class P Voting Preferred
Stock, the following terms shall have the meanings indicated:
56
2.1 ''Available Unissued ESOP Shares'' shall have the meaning set forth in
Article FIFTH, Section 1.5 of this Restated Certificate.
2.2 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee of such board of directors authorized by such board
of directors to perform any of its responsibilities with respect to the Class P
Voting Preferred Stock.
2.3 ''Business Day'' shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
2.4 ''Class 1 ESOP Convertible Preferred Stock'' shall mean the Class 1 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
2.5 ''Class 2 ESOP Convertible Preferred Stock'' shall mean the Class 2 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
2.6 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
2.7 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.9 ''Class P Voting Preferred Stock'' shall have the meaning set forth in
Section 1 hereof.
2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.13 ''Common Stock'' shall mean the common stock, par value $0.01 per share,
of the Corporation.
2.14 ''Conversion Rate'' shall have the meaning set forth in Section 9.1
hereof.
2.15 ''Current Market Price'' of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the Corporation or
any other issuer for any day shall mean the last reported sales price, regular
way, on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the New York Stock Exchange Composite Tape or, if such security
is not listed or admitted for trading on the New York Stock Exchange, Inc.
(''NYSE''), on the principal national securities exchange on which such security
is listed or admitted for trading or quoted or, if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market or, if such security is not quoted on such National Market, the average
of the closing bid and asked prices on such day in the over-the-counter market
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System (''NASDAQ'') or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the average of the bid and
asked prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of Directors.
57
2.16 ''Director Preferred Stocks'' shall mean, collectively, the Class I
Preferred Stock, the Class Pilot MEC Preferred Stock, the Class IAM Preferred
Stock and the Class SAM Preferred Stock.
2.17 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class
1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred
Stock.
2.18 ''Issue Date'' shall mean the first date on which shares of Class P
Voting Preferred Stock are issued.
2.19 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.20 ''Measuring Date'' shall mean that date which is the 365th day following
the Issue Date.
2.21 ''Pilot Fraction'' shall mean 0.4623.
2.22 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.23 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.24 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.25 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.26 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.27 [Reserved]
2.28 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class P
Voting Preferred Stock as to distributions upon liquidation, dissolution or
winding up of the Corporation are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar agent, then
''set apart for payment'' with respect to the Class P Voting Preferred Stock
shall mean, with respect to such distributions, placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar agent.
2.29 ''Termination Date'' shall have the meaning set forth in Article FIFTH,
Section 1.72 of this Restated Certificate.
2.30 ''Trading Day'' shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading or quoted on the NYSE, on the principal national securities exchange on
which such securities are listed or admitted, or if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market, or if such securities are not quoted on such National Market, in the
applicable securities market in which the securities are traded.
2.31 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class P Voting Preferred Stock.
58
2.32 ''Voting Fraction'' shall mean 0.55 with respect to votes and consents
that have a record date on or prior to the Measuring Date and a fraction that is
equivalent to the Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March 25, 1994, among the
Corporation, the Air Line Pilots Association, International and International
Association of Machinists and Aerospace Workers, as amended from time to time)
as in effect at the close of business on the Measuring Date with respect to
votes and consents that have a record date after the Measuring Date.
2.33 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting
Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends. The holders of shares of the Class P Voting
Preferred Stock as such shall not be entitled to receive any dividends or other
distributions (except as provided in Section 4 below).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class P Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class P Voting Preferred Stock shall be entitled to
receive $0.01 per share of Class P Voting Preferred Stock (the ''Liquidation
Preference''), but such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable among the holders
of the shares of Class P Voting Preferred Stock shall be insufficient to pay in
full the Liquidation Preference and the liquidation preference on all other
shares of any class or series of stock of the Corporation that ranks on a parity
with the Class P Voting Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation, then such assets, or
the proceeds thereof, shall be distributed among the holders of shares of Class
P Voting Preferred Stock and any such other parity stock ratably in accordance
with the respective amounts that would be payable on such shares of Class P
Voting Preferred Stock and any such other parity stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with or into one or more
corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class of
stock ranking prior to or on a parity with the Class P Voting Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holders of the Class P
Voting Preferred Stock, as and to the fullest extent provided in this Section 4,
any other series or class of stock of the Corporation that ranks junior to the
Class P Voting Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up of the Corporation, shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the Class P
Voting Preferred Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. All shares of Class P Voting Preferred
Stock which shall have been issued and reacquired in any manner by the
Corporation shall be retired and shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Class P Voting Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of such
class or series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of Class P Voting Preferred Stock;
59
(b) on a parity with the Class P Voting Preferred Stock as to the
distribution of assets upon liquidation, dissolution or winding up, whether or
not the liquidation prices per share thereof be different from those of the
Class P Voting Preferred Stock, if the holders of such class or series and the
Class P Voting Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective liquidation preferences, without preference or priority one
over the other; and
(c) junior to the Class P Voting Preferred Stock, as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of Class P
Voting Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in preference or
priority to the holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred Stock, the Series D
Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to
rank prior to the Class P Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The other Voting Preferred Stocks
and the Director Preferred Stocks shall each be deemed to rank on a parity with
the Class P Voting Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock and the Series C Preferred Stock
shall each be deemed to rank junior to the Class P Voting Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any consolidation, merger, share
exchange or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged solely for or changed,
reclassified or converted solely into stock of any successor, resulting or other
company (including the Corporation) (each of the foregoing is referred to herein
as ''Merger Transaction'') that constitutes ''qualifying employer securities''
with respect to holders of Class P Voting Preferred Stock within the meaning of
Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement
Income Security Act of 1974, as amended, or any successor provisions of law,
and, if applicable, for a cash payment in lieu of fractional shares, if any,
proper provisions shall be made so that upon consummation of such transaction,
the shares of Class P Voting Preferred Stock shall be converted into or
exchanged for preferred stock of such successor, resulting or other company (the
''New Pilot Voting Preferred Stock''), having in respect of such company, except
as provided below, the same powers, preferences and relative, participating,
optional or other special rights (including the rights provided by this Section
7), and the qualifications, limitations or restrictions thereof, that the Class
P Voting Preferred Stock had, in respect of the Corporation, immediately prior
to such transaction, except that after such transaction each share of such New
Pilot Voting Preferred Stock so received in such transaction upon conversion or
exchange of the Class P Voting Preferred Stock shall be convertible, otherwise
on the terms and conditions provided by Section 9 hereof, into the number and
kind of ''qualifying employer securities'' receivable in such transaction by a
holder of the number of shares of Common Stock into which a share of Class P
Voting Preferred Stock could have been converted immediately prior to such
transaction; provided, however, that the holder of each share of New Pilot
Voting Preferred Stock shall be entitled to a number of votes per share equal to
a fraction, the numerator of which is the product of (x) the Pilot Fraction and
(y) the aggregate number of votes that would be entitled to be cast by the
holders of the securities of the surviving, resulting or other corporation into
which the ESOP Convertible Preferred Stocks are changed, reclassified or
converted (collectively, the ''New ESOP Convertible Preferred Stocks'') upon
consummation of such transaction (assuming for such purpose the conversion of
the New ESOP Convertible Preferred Stocks), and the denominator of which is the
aggregate number of shares of New Pilot Voting Preferred Stock then outstanding;
provided, further that if by virtue of the structure of such transaction, a
holder of Common Stock is required to make an election with respect to the
nature and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holders of the Class P Voting
Preferred Stock, then the shares of New Pilot Voting Preferred Stock received in
such transaction upon conversion or exchange of Class P Voting Preferred Stock
shall, by virtue of such transaction and on the same terms as apply to the
holders of Common Stock, be convertible into or exchangeable solely for
''qualifying employer securities'' (together, if applicable, with a cash payment
in lieu of fractional shares) with the effect provided above on the basis of the
number and kind of qualifying employer securities receivable in such transaction
by a holder of the number of shares of Common Stock into which such shares of
Class P Voting Preferred Stock could have been converted
60
immediately prior to such transaction (provided that if the kind or amount of
qualifying employer securities receivable in such transaction is not the same
for each such share of Common Stock, then the kind and amount so receivable in
such transaction for each share of Common Stock for this purpose shall be deemed
to be the kind and amount so receivable per share by the plurality of such
shares of Common Stock). The rights of the New Pilot Voting Preferred Stock so
received in such transaction upon conversion or exchange of the Class P Voting
Preferred Stock shall successively be subject to adjustment pursuant to Section
9 hereof following such transaction as nearly equivalent to the adjustments
provided for by such Section prior to such transaction.
7.2 In case the Corporation shall enter into any Merger Transaction, however
named, pursuant to which the outstanding shares of Common Stock are exchanged
for or changed, reclassified or converted into other stock or securities or cash
or any other property, or any combination thereof, other than any such
consideration which is constituted solely of ''qualifying employer securities''
(as referred to in Section 7.1) and cash payments, if applicable, in lieu of
fractional shares, proper provisions shall be made so that each outstanding
share of Class P Voting Preferred Stock shall, by virtue of and upon
consummation of such transaction, on the same terms as are applicable to the
holders of Common Stock, be converted into or exchanged for the aggregate amount
of stock, securities, cash or other property (payable in like kind) receivable
by holders of the number of shares of Common Stock into which such shares of
Class P Voting Preferred Stock could have been converted immediately prior to
such transaction; provided, however, that if by virtue of the structure of such
transaction, a holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by holders of the Class P
Voting Preferred Stock, then the shares of Class P Voting Preferred Stock shall,
by virtue of such transaction and on the same terms as apply to the holders of
Common Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in kind) receivable by a holder of
the number of shares of Common Stock into which such shares of Class P Voting
Preferred Stock could have been converted immediately prior to such transaction
if such holder of Common Stock failed to exercise any rights of election to
receive any kind or amount of stock, securities, cash or other property
receivable in such transaction (provided that if the kind or amount of stock,
securities, cash or other property receivable in such transaction are not the
same for each non-electing share, then the kind and amount of stock, securities,
cash or other property so receivable upon such transaction for each non-electing
share shall be the kind and amount so receivable per share by the plurality of
the non-electing shares).
7.3 In case the Corporation shall enter into any agreement providing for any
Merger Transaction described in Section 7.1 or 7.2, then the Corporation shall
as soon as practicable thereafter (and in any event at least fifteen (15)
Business Days before consummation of such transaction) give notice of such
agreement and the material terms thereof to each holder of Class P Voting
Preferred Stock. The Corporation shall not consummate any such Merger
Transaction unless all of the terms of this Section 7 have been complied with.
Section 8. Voting. The holders of shares of Class P Voting Preferred Stock
shall have the following voting rights:
8.1 Except as otherwise required by law or provided in this Restated
Certificate, the holders of Class P Voting Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the holders of Common Stock of the
Corporation, voting together as a single class with the holders of Common Stock
and the holders of such other classes and series of stock that vote together
with the Common Stock as a single class; provided, however, that prior to the
Termination Date, the holders of Class P Voting Preferred Stock shall not be
entitled to vote with respect to the election of the members of the Board of
Directors. For purposes of this Section 8.1, with respect to any vote or consent
with a record date occurring prior to the Termination Date, (a) the holders of
the shares of Class P Voting Preferred Stock from time to time outstanding
shall, collectively, be entitled to a number of votes (rounded to the nearest
whole vote) equal to the excess of (i) the product of (I) the Pilot Fraction,
(II) the Voting Fraction and (III) a fraction, the numerator of which shall be
the number of votes entitled to be cast on the matter by the holders of all
outstanding securities of the Corporation (excluding the Voting Preferred Stocks
and the shares of Common Stock issued upon conversion of the ESOP Convertible
Preferred Stocks and held on the applicable record date in the ESOP or the
Supplemental ESOP), and the denominator of which shall be the excess of one
(1.0) over the Voting Fraction, over (ii) the sum of (A) the aggregate number of
shares of Common Stock held under the ESOP or the Supplemental ESOP which have
been issued upon conversion of the ESOP Convertible Preferred Stocks and have
61
been, on the applicable record date, allocated under the ESOP or the
Supplemental ESOP to the accounts of individuals who are members of the ALPA
Employee Group (as defined in the ESOP), (B) the product of (x) the number of
shares of Common Stock held under the ESOP which have been issued upon
conversion of the Class 1 ESOP Convertible Preferred Stock and are held on the
applicable record date in the Loan Suspense Account (as defined in the ESOP)
under the ESOP multiplied by (y) the Pilot Fraction, and (C) the product of (aa)
the number of shares of Common Stock held by the Supplemental ESOP which have
been issued upon conversion of the Class 2 ESOP Convertible Preferred Stock and
are held on the applicable record date in the Phantom Suspense Account (as
defined in the Supplemental ESOP) under the Supplemental ESOP multiplied by (bb)
the Pilot Fraction (the excess of clause (i) over clause (ii) being referred to
herein as the ''Attributed Votes''); and (b) the holder of each share of the
Class P Voting Preferred Stock shall be entitled to a number of votes per share
(rounded to the nearest one hundred millionth of a vote) equal to the result of
dividing (x) the number of Attributed Votes by (y) the number of shares of Class
P Voting Preferred Stock outstanding on the applicable record date. With respect
to each vote or consent with a record date occurring on or after the Termination
Date, each share of Class P Voting Preferred Stock then outstanding shall be
entitled to the number of votes per share (rounded to the nearest one hundred
millionth of a vote) equal to a fraction, the numerator of which is the product
of (i) the sum of (x) the number of shares of Common Stock into which the ESOP
Convertible Preferred Stocks then outstanding can be converted as of the record
date with respect to such vote or consent and (y) the number of Available
Unissued ESOP Shares as of such record date and (ii) the Pilot Fraction, and the
denominator of which is the number of shares of Class P Voting Preferred Stock
outstanding as of such record date. For purposes of this Section 8.1, the
Corporation shall certify to the holders of Class P Voting Preferred Stock and
to the judges or similar officials appointed for the purpose of tabulating votes
at any meeting of stockholders as soon as practicable following the record date
for the determination of stockholders entitled to notice of or to vote at any
meeting of stockholders, but in no event less than five Trading Days before such
meeting, with respect to record dates prior to the Termination Date, the number
of shares of Common Stock then outstanding and the number of votes entitled to
be cast on the matter or matters in question by the holders of all outstanding
securities of the Corporation (excluding the Voting Preferred Stocks and the
shares of Common Stock issued upon conversion of the ESOP Convertible Preferred
Stocks and held on the applicable record date in the ESOP or the Supplemental
ESOP) and, with respect to record dates from and after the Termination Date, the
number of shares of Common Stock into which a share of ESOP Convertible
Preferred Stock was convertible as of the record date for such vote or votes.
The Corporation shall be deemed to satisfy the requirements of the preceding
sentence if such matters are specified in any proxy statement mailed to all
stockholders entitled to vote on such matter or matters.
Prior to the Termination Date, the outstanding shares of the Voting Preferred
Stocks, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and
the Class SAM Preferred Stock, together with the shares of Common Stock held by
the ESOP and the Supplemental ESOP that were received upon conversion of the
ESOP Preferred Stocks, will represent the Voting Fraction (expressed as a
percentage) of the votes to be cast in connection with matters (other than the
election of directors) submitted to the vote of the holders of the Common Stock
and the holders of all other outstanding securities that vote as a single class
together with the Common Stock. Subject to any amendment of this Restated
Certificate after the date hereof, it is the intent of this Restated Certificate
that this Section 8.1 (with respect to the Class P Voting Preferred Stock),
Article FOURTH, Part V, Section 8.1 of the Restated Certificate (with respect to
the Class M Voting Preferred Stock) and Article FOURTH, Part VI, Section 8.1 of
the Restated Certificate (with respect to the Class S Voting Preferred Stock) be
interpreted together to achieve the foregoing result.
8.2 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class P Voting Preferred Stock shall then be required by law or
this Restated Certificate, and in addition to any other vote required by law or
this Restated Certificate, the affirmative vote or written consent of the
holders of at least a majority of all of the outstanding shares of Class P
Voting Preferred Stock, voting separately as a class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal
(including any amendment, alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of the Class P Voting Preferred
Stock or of either of the ESOP Convertible Preferred Stocks.
62
8.3 For purposes of the foregoing provisions of Section 8.2, each share of
Class P Voting Preferred Stock shall have one (1) vote per share.
8.4 Notwithstanding anything to the contrary in Section 7 or 8.1, if at any
time prior to the Termination Date, (x) the trustee under either (i) the ESOP or
(ii) the Supplemental ESOP (together with the ESOP, the ''Employee Plan'')
either (a) fails to solicit, in accordance with the Employee Plan, timely
instructions from Employee Plan participants, the Committee of the ESOP (as
defined in the ESOP and hereinafter referred to as the ''ESOP Committee'') or
the Committee of the Supplemental ESOP (as defined in the Supplemental ESOP and,
together with the ESOP Committee, the ''Committees''), as applicable
(''Instructions''), with respect to any matter referred to in clause (y) below,
or (b) fails to act in accordance with such Instructions with respect to any
matter referred to in clause (y) below (but only if such failure to follow such
Instructions is attributable to (i) the trustee having concluded that, based
upon the terms of such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such instructions or (ii) the unenforceability of the
provisions of the ESOP and/or the Supplemental ESOP relating to the solicitation
and/or following of such Instructions); (y) either (i) but for the provisions of
Article FOURTH, Part VII, Subsection 8.3(a), Article FOURTH, Part VIII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection 8.3(a) of this
Restated Certificate, the vote of the stockholders of the Corporation would have
been sufficient, under applicable law, stock exchange listing requirements and
this Restated Certificate, as applicable, to approve the Merger Transaction or
other Control Transaction (as defined in the ESOP) in question (or, if no
stockholder approval would be required by this Restated Certificate, applicable
stock exchange listing requirements or applicable law, the trustee enters into a
binding commitment in connection with a Control Transaction or a Control
Transaction is consummated) or (ii) following the Issue Date, the trustee
disposes of an aggregate of 10% or more of the Common Equity (as defined in
Article FIFTH, Section 1.26 of this Restated Certificate) initially represented
by the ESOP Convertible Preferred Stocks other than in connection with Employee
Plan distributions or diversification requirements; and (z) any of the following
occur: (a) Instructions with respect to a matter are given, the trustee fails to
follow such Instructions and such transaction would not have been approved by
stockholders of the Corporation in accordance with the applicable provisions of
this Restated Certificate (excluding Article FOURTH, Part VII, Subsection
8.3(a), Article FOURTH, Part VIII, Subsection 8.3(a) and Article FOURTH, Part
IX, Subsection 8.3(a) of this Restated Certificate), applicable stock exchange
listing requirements or applicable law if the trustee had acted in accordance
with such Instructions (or, if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing requirements or
applicable law, such action by the trustee in respect of such transaction as to
which Instructions were so given would not have been authorized had the trustee
acted in accordance with such Instructions), (b) the trustee fails to solicit
timely Instructions with respect to such matters, such transaction requires the
approval of stockholders of the Corporation under applicable provisions of this
Restated Certificate, applicable stock exchange listing requirements or
applicable law and such approval would not have been obtained (without regard to
the provisions of Article FOURTH, Part VII, Subsection 8.3(a), Article FOURTH,
Part VIII, Subsection 8.3(a) and Article FOURTH, Part IX, Subsection 8.3(a) of
this Restated Certificate) if the trustee had voted against such transaction all
of the votes entitled to be cast by such trustee as the holder of securities of
the Corporation held under the Employee Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect to such matter and
no vote of stockholders of the Corporation is required by the Restated
Certificate, applicable stock exchange listing requirements or applicable law to
approve such transaction (an action or inaction by the trustee under clauses (x)
and (z) in connection with a transaction referred to in clause (y) being
referred to herein as an ''Uninstructed Trustee Action''); then each outstanding
share of Class P Voting Preferred Stock shall, immediately and automatically,
without any further action on the part of holders thereof or of the Corporation,
be converted into shares of Common Stock at the applicable Conversion Rate in
accordance with Section 9 hereof.
Section 9. Automatic Conversion.
9.1 Shares of Class P Voting Preferred Stock shall, as provided in Sections
1.2 and 8.4, be automatically converted, from time to time, in part or in whole,
respectively, upon (i) any transfer thereof other than a transfer described in
clauses (x) and (y) of Section 1.2 or (ii) an Uninstructed Trustee Action as
described in Section 8.4, at a rate of one ten thousandth of a share of Common
Stock per share of Class P Voting Preferred Stock to be converted (the
''Conversion Rate'').
63
9.2 At the time that all of the shares of the ESOP Convertible Preferred
Stocks cease to be outstanding for any reason whatsoever, including, without
limitation, their conversion in full into Common Stock (the ''Final Conversion
Date''), all outstanding shares of Class P Voting Preferred Stock shall be
automatically converted, in full, into shares of Common Stock at the Conversion
Rate then in effect.
9.3 Following any conversion in accordance with Sections 9.1 and 9.2, (i) no
holder of Class P Voting Preferred Stock shall have any of the voting powers,
preferences, relative, participating, optional or special rights ascribed to
shares of Class P Voting Preferred Stock hereunder, but, rather, shall have only
the powers and rights pertaining to the Common Stock into which such shares of
Class P Voting Preferred Stock have been so converted, and (ii) any holder of
Class P Voting Preferred Stock shall be treated for all purposes as the record
holder of the shares of Common Stock into which the Class P Voting Preferred
Stock shall have been converted as of the date of the conversion of the shares
of Class P Voting Preferred Stock.
9.4 On or after the date of (i) a transfer of shares of Class P Voting
Preferred Stock (other than as described in clauses (x) and (y) of Section 1.2),
(ii) the Final Conversion Date or (iii) an Uninstructed Trustee Action, each
holder of a certificate or certificates formerly representing shares of Class P
Voting Preferred Stock converted in accordance with Sections 9.1 and 9.2 shall
surrender such certificate or certificates, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent (if other than the
Corporation) in the Borough of Manhattan, City of New York. Unless the shares
issuable on conversion are to be issued in the same name as the name in which
such certificate is registered, each such certificate shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid or that no such taxes
are payable).
9.5 No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon conversion of the Class P Voting Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Class P Voting
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than one certificate shall
be surrendered in respect of such conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon conversion shall be computed
on the basis of the aggregate number of shares of Class P Voting Preferred Stock
formerly represented by the certificates so surrendered.
9.6 In the event of an adjustment to the ''Conversion Rate'' in effect with
respect to the ESOP Convertible Preferred Stocks, a corresponding adjustment
shall be made to the Conversion Rate with respect to the Class P Voting
Preferred Stock.
Section 10. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of any shares
of Class P Voting Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
PART V
Class M ESOP Voting Junior Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part V to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part V.
Section 1. Number of Shares; Designation; Issuances; Automatic Conversion.
64
1.1 The Class M ESOP Voting Junior Preferred Stock of the Corporation (the
''Class M Voting Preferred Stock'') shall consist of 9,300,000 shares, par value
$0.01 per share.
1.2 Shares of Class M Voting Preferred Stock shall be issued only to a trustee
or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership
Plan (the ''ESOP''), (ii) the UAL Corporation Supplemental ESOP (the
''Supplemental ESOP'') or (iii) any other employee stock ownership trust or plan
or other employee benefit plan of the Corporation or any of its subsidiaries
(each, a ''Plan''). In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other realization upon
shares of Class M Voting Preferred Stock pledged as security for any loan or
loans made to a Plan or to the trustee or the trustees acting on behalf of a
Plan) (hereinafter a ''transfer'') of shares of Class M Voting Preferred Stock
to any person (including, without limitation, any participant in a Plan) other
than (x) any Plan or trustee or trustees of a Plan or (y) any pledgee of such
shares acquiring such shares as security for any loan or loans made to the Plan
or to any trustee or trustees acting on behalf of the Plan, the shares of Class
M Voting Preferred Stock so transferred, upon such transfer and without any
further action by the Corporation or the holder, shall be automatically
converted into shares of Common Stock at the applicable Conversion Rate in
accordance with Section 9 hereof and thereafter such transferee shall not have
any of the voting powers, preferences or relative, participating, optional or
special rights ascribed to shares of Class M Voting Preferred Stock hereunder,
but, rather, shall have only the powers and rights pertaining to the Common
Stock into which such shares of Class M Voting Preferred Stock shall be so
converted. In the event of any such automatic conversion provided for in this
Section 1.2, such transferee shall be treated for all purposes as the record
holder of the shares of Common Stock into which the Class M Voting Preferred
Stock shall have been converted as of the date of such conversion. Certificates
representing shares of Class M Voting Preferred Stock shall be legended to
reflect such consequences of a transfer. The shares of Common Stock issued upon
any conversion in accordance with Section 9 hereof or this Section 1.2 may be
transferred by the holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class M Voting Preferred
Stock, the following terms shall have the meanings indicated:
2.1 ''Available Unissued ESOP Shares'' shall have the meaning set forth in
Article FIFTH, Section 1.5 of this Restated Certificate.
2.2 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee of such board of directors authorized by such board
of directors to perform any of its responsibilities with respect to the Class M
Voting Preferred Stock.
2.3 ''Business Day'' shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
2.4 ''Class 1 ESOP Convertible Preferred Stock'' shall mean the Class 1 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
2.5 ''Class 2 ESOP Convertible Preferred Stock'' shall mean the Class 2 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
2.6 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
2.7 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class M Voting Preferred Stock'' shall have the meaning set forth in
Section 1 hereof.
2.9 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
65
2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
2.11 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.13 ''Common Stock'' shall mean the common stock, par value $0.01 per share,
of the Corporation.
2.14 ''Conversion Rate'' shall have the meaning set forth in Section 9.1
hereof.
2.15 ''Current Market Price'' of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the Corporation or
any other issuer for any day shall mean the last reported sales price, regular
way on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the New York Stock Exchange Composite Tape or, if such security
is not listed or admitted for trading on the New York Stock Exchange, Inc.
(''NYSE''), on the principal national securities exchange on which such security
is listed or admitted for trading or quoted or, if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market or, if such security is not quoted on such National Market, the average
of the closing bid and asked prices on such day in the over-the-counter market
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System (''NASDAQ'') or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the average of the bid and
asked prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of Directors.
2.16 ''Director Preferred Stocks'' shall mean, collectively, the Class I
Preferred Stock, the Class Pilot MEC Preferred Stock, the Class IAM Preferred
Stock and the Class SAM Preferred Stock.
2.17 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class
1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred
Stock.
2.18 ''Issue Date'' shall mean the first date on which shares of Class M
Voting Preferred Stock are issued.
2.19 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.20 ''Machinist Fraction '' shall mean 0.3713.
2.21 ''Measuring Date'' shall mean that date which is the 365th day following
the Issue Date.
2.22 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.23 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.24 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.25 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
66
2.26 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.27 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class M
Voting Preferred Stock as to distributions upon liquidation, dissolution or
winding up of the Corporation are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar agent, then
''set apart for payment'' with respect to the Class M Voting Preferred Stock
shall mean, with respect to such distributions, placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar agent.
2.28 ''Termination Date'' shall have the meaning set forth in Article FIFTH,
Section 1.72 of this Restated Certificate.
2.29 ''Trading Day'' shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading or quoted on the NYSE, on the principal national securities exchange on
which such securities are listed or admitted, or if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market, or if such securities are not quoted on such National Market, in the
applicable securities market in which the securities are traded.
2.30 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class M Voting Preferred Stock.
2.31 ''Voting Fraction'' shall mean 0.55 with respect to votes and consents
that have a record date on or prior to the Measuring Date and a fraction that is
equivalent to the Adjusted Percentage (as defined in the Agreement and Plan of
Recapitalization, dated as of March 25, 1994, among the Corporation, the Air
Line Pilots Association, International and International Association of
Machinists and Aerospace Workers, as amended from time to time) as in effect at
the close of business on the Measuring Date with respect to votes and consents
that have a record date after the Measuring Date.
2.32 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting
Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends. The holders of shares of the Class M Voting
Preferred Stock as such shall not be entitled to receive any dividends or other
distributions (except as provided in Section 4 below).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class M Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class M Voting Preferred Stock shall be entitled to
receive $0.01 per share of Class M Voting Preferred Stock (the ''Liquidation
Preference''), but such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable among the holders
of the shares of Class M Voting Preferred Stock shall be insufficient to pay in
full the Liquidation Preference and the liquidation preference on all other
shares of any class or series of stock of the Corporation that ranks on a parity
with the Class M Voting Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation, then such assets, or
the proceeds thereof, shall be distributed among the holders of shares of Class
M Voting Preferred Stock and any such other parity stock ratably in accordance
with the respective amounts that would be payable on such shares of Class M
Voting Preferred Stock and any such other parity stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4,
67
(i) a consolidation or merger of the Corporation with or into one or more
corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class of
stock ranking prior to or on a parity with the Class M Voting Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holders of the Class M
Voting Preferred Stock, as and to the fullest extent provided in this Section 4,
any other series or class of stock of the Corporation that ranks junior to the
Class M Voting Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up of the Corporation, shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the Class M
Voting Preferred Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. All shares of Class M Voting Preferred
Stock which shall have been issued and reacquired in any manner by the
Corporation shall be retired and shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Class M Voting Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of such
class or series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of Class M Voting Preferred Stock;
(b) on a parity with the Class M Voting Preferred Stock as to the
distribution of assets upon liquidation, dissolution or winding up, whether or
not the liquidation prices per share thereof be different from those of the
Class M Voting Preferred Stock, if the holders of such class or series and the
Class M Voting Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective liquidation preferences, without preference or priority one
over the other; and
(c) junior to the Class M Voting Preferred Stock, as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of Class M
Voting Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in preference or
priority to the holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred Stock, the Series D
Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to
rank prior to the Class M Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The other Voting Preferred Stocks
and the Director Preferred Stocks shall each be deemed to rank on a parity with
the Class M Voting Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock and the Series C Preferred Stock
shall each be deemed to rank junior to the Class M Voting Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any consolidation, merger, share
exchange or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged solely for or changed,
reclassified or converted solely into stock of any successor, resulting or other
company (including the Corporation) (each of the foregoing is referred to herein
as ''Merger Transaction'') that constitutes ''qualifying employer securities''
with respect to holders of Class M Voting Preferred Stock within the meaning of
Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement
Income Security Act of 1974, as amended, or any successor provisions of law,
and, if applicable, for a cash payment in lieu of fractional shares, if any,
proper provisions shall be made so that upon consummation of such transaction,
the shares of Class M Voting Preferred
68
Stock shall be converted into or exchanged for preferred stock of such
successor, resulting or other company (the ''New Machinist Voting Preferred
Stock''), having in respect of such company, except as provided below, the same
powers, preferences and relative, participating, optional or other special
rights (including the rights provided by this Section 7), and the
qualifications, limitations or restrictions thereof, that the Class M Voting
Preferred Stock had, in respect of the Corporation, immediately prior to such
transaction, except that after such transaction each share of such New Machinist
Voting Preferred Stock so received in such transaction upon conversion or
exchange of the Class M Voting Preferred Stock shall be convertible, otherwise
on the terms and conditions provided by Section 9 hereof, into the number and
kind of ''qualifying employer securities'' receivable in such transaction by a
holder of the number of shares of Common Stock into which a share of Class M
Voting Preferred Stock could have been converted immediately prior to such
transaction; provided, however, that the holder of each share of New Machinist
Voting Preferred Stock shall be entitled to a number of votes per share equal to
a fraction, the numerator of which is the product of (x) the Machinist Fraction
and (y) the aggregate number of votes that would be entitled to be cast by the
holders of the securities of the surviving, resulting or other corporation into
which the ESOP Convertible Preferred Stocks are changed, reclassified or
converted (collectively, the ''New ESOP Convertible Preferred Stocks'') upon
consummation of such transaction (assuming for such purpose the conversion of
the New ESOP Convertible Preferred Stocks), and the denominator of which is the
aggregate number of shares of New Machinist Voting Preferred Stock then
outstanding; provided, further that if by virtue of the structure of such
transaction, a holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by the holders of the
Class M Voting Preferred Stock, then the shares of New Machinist Voting
Preferred Stock received in such transaction upon conversion or exchange of
Class M Voting Preferred Stock shall, by virtue of such transaction and on the
same terms as apply to the holders of Common Stock, be convertible into or
exchangeable solely for ''qualifying employer securities'' (together, if
applicable, with a cash payment in lieu of fractional shares) with the effect
provided above on the basis of the number and kind of qualifying employer
securities receivable in such transaction by a holder of the number of shares of
Common Stock into which such shares of Class M Voting Preferred Stock could have
been converted immediately prior to such transaction (provided that if the kind
or amount of qualifying employer securities receivable in such transaction is
not the same for each such share of Common Stock, then the kind and amount so
receivable in such transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per share by the
plurality of such shares of Common Stock). The rights of the New Machinist
Voting Preferred Stock so received in such transaction upon conversion or
exchange of the Class M Voting Preferred Stock shall successively be subject to
adjustment pursuant to Section 9 hereof following such transaction as nearly
equivalent to the adjustments provided for by such Section prior to such
transaction.
7.2 In case the Corporation shall enter into any Merger Transaction, however
named, pursuant to which the outstanding shares of Common Stock are exchanged
for or changed, reclassified or converted into other stock or securities or cash
or any other property, or any combination thereof, other than any such
consideration which is constituted solely of ''qualifying employer securities''
(as referred to in Section 7.1) and cash payments, if applicable, in lieu of
fractional shares, proper provisions shall be made so that each outstanding
share of Class M Voting Preferred Stock shall, by virtue of and upon
consummation of such transaction, on the same terms as are applicable to the
holders of Common Stock, be converted into or exchanged for the aggregate amount
of stock, securities, cash or other property (payable in like kind) receivable
by holders of the number of shares of Common Stock into which such shares of
Class M Voting Preferred Stock could have been converted immediately prior to
such transaction; provided, however, that if by virtue of the structure of such
transaction, a holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by holders of the Class M
Voting Preferred Stock, then the shares of Class M Voting Preferred Stock shall,
by virtue of such transaction and on the same terms as apply to the holders of
Common Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in kind) receivable by a holder of
the number of shares of Common Stock into which such shares of Class M Voting
Preferred Stock could have been converted immediately prior to such transaction
if such holder of Common Stock failed to exercise any rights of election to
receive any kind or amount of stock, securities, cash or other property
receivable in such transaction (provided that if the kind or amount of stock,
securities, cash or other property receivable in such transaction are not the
same for each non-electing share, then the kind and amount of stock, securities,
cash or other property so receivable upon such transaction for each non-electing
share shall be the kind and amount so receivable per share by the plurality of
the non-electing shares).
69
7.3 In case the Corporation shall enter into any agreement providing for any
Merger Transaction described in Section 7.1 or 7.2, then the Corporation shall
as soon as practicable thereafter (and in any event at least fifteen (15)
Business Days before consummation of such transaction) give notice of such
agreement and the material terms thereof to each holder of Class M Voting
Preferred Stock. The Corporation shall not consummate any such Merger
Transaction unless all of the terms of this Section 7 have been complied with.
Section 8. Voting. The holders of shares of Class M Voting Preferred Stock
shall have the following voting rights:
8.1 Except as otherwise required by law or provided in this Restated
Certificate, the holders of Class M Voting Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the holders of Common Stock of the
Corporation, voting together as a single class with the holders of Common Stock
and the holders of such other classes and series of stock that vote together
with the Common Stock as a single class; provided, however, that prior to the
Termination Date, the holders of Class M Voting Preferred Stock shall not be
entitled to vote with respect to the election of the members of the Board of
Directors. For purposes of this Section 8.1, with respect to any vote or consent
with a record date occurring prior to the Termination Date, (a) the holders of
the shares of Class M Voting Preferred Stock from time to time outstanding
shall, collectively, be entitled to a number of votes (rounded to the nearest
whole vote) equal to the excess of (i) the product of (I) the Machinist
Fraction, (II) the Voting Fraction and (III) a fraction, the numerator of which
shall be the number of votes entitled to be cast on the matter by the holders of
all outstanding securities of the Corporation (excluding the Voting Preferred
Stocks and the shares of Common Stock issued upon conversion of the ESOP
Convertible Preferred Stocks and held on the applicable record date in the ESOP
or the Supplemental ESOP), and the denominator of which shall be the excess of
one (1.0) over the Voting Fraction, over (ii) the sum of (A) the aggregate
number of shares of Common Stock held under the ESOP or the Supplemental ESOP
which have been issued upon conversion of the ESOP Convertible Preferred Stocks
and have been, on the applicable record date, allocated under the ESOP or the
Supplemental ESOP to the accounts of individuals who are members of the IAM
Employee Group (as defined in the ESOP), (B) the product of (x) the number of
shares of Common Stock held under the ESOP which have been issued upon
conversion of the Class 1 ESOP Convertible Preferred Stock and are held on the
applicable record date in the Loan Suspense Account (as defined in the ESOP)
under the ESOP multiplied by (y) the Machinist Fraction, and (C) the product of
(aa) the number of shares of Common Stock held by the Supplemental ESOP which
have been issued upon conversion of the Class 2 ESOP Convertible Preferred Stock
and are held on the applicable record date in the Phantom Suspense Account (as
defined in the Supplemental ESOP) under the Supplemental ESOP multiplied by (bb)
the Machinist Fraction (the excess of clause (i) over clause (ii) being referred
to herein as the ''Attributed Votes''); and (b) the holder of each share of the
Class M Voting Preferred Stock shall be entitled to a number of votes per share
(rounded to the nearest one hundred millionth of a vote) equal to the result of
dividing (x) the number of Attributed Votes by (y) the number of shares of Class
M Voting Preferred Stock outstanding on the applicable record date. With respect
to each vote or consent with a record date occurring on or after the Termination
Date, each share of Class M Voting Preferred Stock then outstanding shall be
entitled to the number of votes per share (rounded to the nearest one hundred
millionth of a vote) equal to a fraction, the numerator of which is the product
of (i) the sum of (x) the number of shares of Common Stock into which the ESOP
Convertible Preferred Stocks then outstanding can be converted as of the record
date with respect to such vote or consent and (y) the number of Available
Unissued ESOP Shares as of such record date and (ii) the Machinist Fraction, and
the denominator of which is the number of shares of Class M Voting Preferred
Stock outstanding as of such record date. For purposes of this Section 8.1, the
Corporation shall certify to the holders of Class M Voting Preferred Stock and
to the judges or similar officials appointed for the purpose of tabulating votes
at any meeting of stockholders as soon as practicable following the record date
for the determination of stockholders entitled to notice of or to vote at any
meeting of stockholders, but in no event less than five Trading Days before such
meeting, with respect to record dates prior to the Termination Date, the number
of shares of Common Stock then outstanding and the number of votes entitled to
be cast on the matter or matters in question by the holders of all outstanding
securities of the Corporation (excluding the Voting Preferred Stocks and the
shares of Common Stock issued upon conversion of the ESOP Convertible Preferred
Stocks and held on the applicable record date in the ESOP or the Supplemental
ESOP) and, with respect to record dates from and after the Termination Date, the
number of shares of Common Stock into which a share of ESOP Convertible
Preferred Stock was convertible as of the record date for such vote or votes.
The Corporation shall be
70
deemed to satisfy the requirements of the preceding sentence if such matters are
specified in any proxy statement mailed to all stockholders entitled to vote on
such matter or matters.
Prior to the Termination Date, the outstanding shares of the Voting Preferred
Stocks, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and
the Class SAM Preferred Stock, together with the shares of Common Stock held by
the ESOP and the Supplemental ESOP that were received upon conversion of the
ESOP Preferred Stocks, will represent the Voting Fraction (expressed as a
percentage) of the votes to be cast in connection with matters (other than the
election of directors) submitted to the vote of the holders of the Common Stock
and the holders of all other outstanding securities that vote as a single class
together with the Common Stock. Subject to any amendment of this Restated
Certificate after the date hereof, it is the intent of this Restated Certificate
that this Section 8.1 (with respect to the Class M Voting Preferred Stock),
Article FOURTH, Part IV, Section 8.1 of the Restated Certificate (with respect
to the Class P Voting Preferred Stock) and Article FOURTH, Part VI, Section 8.1
of the Restated Certificate (with respect to the Class S Voting Preferred Stock)
be interpreted together to achieve the foregoing result.
8.2 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class M Voting Preferred Stock shall then be required by law or
this Restated Certificate, and in addition to any other vote required by law or
this Restated Certificate, the affirmative vote or written consent of the
holders of at least a majority of all of the outstanding shares of Class M
Voting Preferred Stock, voting separately as a class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal
(including any amendment, alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of the Class M Voting Preferred
Stock or of either of the ESOP Convertible Preferred Stocks.
8.3 For purposes of the foregoing provisions of Section 8.2, each share of
Class M Voting Preferred Stock shall have one (1) vote per share.
8.4 Notwithstanding anything to the contrary in Section 7 or 8.1, if at any
time prior to the Termination Date, (x) the trustee under either (i) the ESOP or
(ii) the Supplemental ESOP (together with the ESOP, the ''Employee Plan'')
either (a) fails to solicit, in accordance with the Employee Plan, timely
instructions from Employee Plan participants, the Committee of the ESOP (as
defined in the ESOP and hereinafter referred to as the ''ESOP Committee'') or
the Committee of the Supplemental ESOP (as defined in the Supplemental ESOP and,
together with the ESOP Committee, the ''Committees''), as applicable
(''Instructions''), with respect to any matter referred to in clause (y) below,
or (b) fails to act in accordance with such Instructions with respect to any
matter referred to in clause (y) below (but only if such failure to follow such
Instructions is attributable to (i) the trustee having concluded that, based
upon the terms of such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such instructions or (ii) the unenforceability of the
provisions of the ESOP and/or the Supplemental ESOP relating to the solicitation
and/or following of such Instructions); (y) either (i) but for the provisions of
Article FOURTH, Part VII, Subsection 8.3(a), Article FOURTH, Part VIII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection 8.3(a) of this
Restated Certificate, the vote of the stockholders of the Corporation would have
been sufficient, under applicable law, stock exchange listing requirements and
this Restated Certificate, as applicable, to approve the Merger Transaction or
other Control Transaction (as defined in the ESOP) in question (or, if no
stockholder approval would be required by this Restated Certificate, applicable
stock exchange listing requirements or applicable law, the trustee enters into a
binding commitment in connection with a Control Transaction or a Control
Transaction is consummated) or (ii) following the Issue Date, the trustee
disposes of an aggregate of 10% or more of the Common Equity (as defined in
Article FIFTH, Section 1.26 of this Restated Certificate) initially represented
by the ESOP Convertible Preferred Stocks other than in connection with Employee
Plan distributions or diversification requirements; and (z) any of the following
occur: (a) Instructions with respect to a matter are given, the trustee fails to
follow such Instructions and such transaction would not have been approved by
stockholders of the Corporation in accordance with the applicable provisions of
this Restated Certificate (excluding Article FOURTH, Part VII, Subsection
8.3(a), Article FOURTH, Part VIII, Subsection 8.3(a) and Article FOURTH, Part
IX, Subsection 8.3(a) of this Restated Certificate), applicable stock exchange
listing requirements or applicable law
71
if the trustee had acted in accordance with such Instructions (or, if no vote of
stockholders would be required by this Restated Certificate, applicable stock
exchange listing requirements or applicable law, such action by the trustee in
respect of such transaction as to which Instructions were so given would not
have been authorized had the trustee acted in accordance with such
Instructions), (b) the trustee fails to solicit timely Instructions with respect
to such matters, such transaction requires the approval of stockholders of the
Corporation under applicable provisions of this Restated Certificate, applicable
stock exchange listing requirements or applicable law and such approval would
not have been obtained (without regard to the provisions of Article FOURTH, Part
VII, Subsection 8.3(a), Article FOURTH, Part VIII, Subsection 8.3(a) and Article
FOURTH, Part IX, Subsection 8.3(a) of this Restated Certificate) if the trustee
had voted against such transaction all of the votes entitled to be cast by such
trustee as the holder of securities of the Corporation held under the Employee
Plan, or (c) the trustee fails to follow Instructions or to solicit timely
Instructions with respect to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate, applicable stock exchange
listing requirements or applicable law to approve such transaction (an action or
inaction by the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to herein as an
''Uninstructed Trustee Action''); then each outstanding share of Class M Voting
Preferred Stock shall, immediately and automatically, without any further action
on the part of holders thereof or of the Corporation, be converted into shares
of Common Stock at the applicable Conversion Rate in accordance with Section 9
hereof.
Section 9. Automatic Conversion.
9.1 Shares of Class M Voting Preferred Stock shall, as provided in Sections
1.2 and 8.4, be automatically converted, from time to time, in part or in whole,
respectively, upon (i) any transfer thereof other than a transfer described in
clauses (x) and (y) of Section 1.2 or (ii) an Uninstructed Trustee Action as
described in Section 8.4, at a rate of one ten thousandth of a share of Common
Stock per share of Class M Voting Preferred Stock to be converted (the
''Conversion Rate'').
9.2 At the time that all of the shares of the ESOP Convertible Preferred
Stocks cease to be outstanding for any reason whatsoever, including, without
limitation, their conversion in full into Common Stock (the ''Final Conversion
Date''), all outstanding shares of Class M Voting Preferred Stock shall be
automatically converted, in full, into shares of Common Stock at the Conversion
Rate then in effect.
9.3 Following any conversion in accordance with Sections 9.1 and 9.2, (i) no
holder of Class M Voting Preferred Stock shall have any of the voting powers,
preferences, relative, participating, optional or special rights ascribed to
shares of Class M Voting Preferred Stock hereunder, but, rather, shall have only
the powers and rights pertaining to the Common Stock into which such shares of
Class M Voting Preferred Stock have been so converted, and (ii) any holder of
Class M Voting Preferred Stock shall be treated for all purposes as the record
holder of the shares of Common Stock into which the Class M Voting Preferred
Stock shall have been converted as of the date of the conversion of the shares
of Class M Voting Preferred Stock.
9.4 On or after the date of (i) a transfer of shares of Class M Voting
Preferred Stock (other than as described in clauses (x) and (y) of Section 1.2),
(ii) the Final Conversion Date or (iii) an Uninstructed Trustee Action, each
holder of a certificate or certificates formerly representing shares of Class M
Voting Preferred Stock converted in accordance with Sections 9.1 and 9.2 shall
surrender such certificate or certificates, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent (if other than the
Corporation) in the Borough of Manhattan, City of New York. Unless the shares
issuable on conversion are to be issued in the same name as the name in which
such certificate is registered, each such certificate shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid or that no such taxes
are payable).
9.5 No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon conversion of the Class M Voting Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Class M Voting
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of
72
Common Stock on the Trading Day immediately preceding the date of conversion. If
more than one certificate shall be surrendered in respect of such conversion at
one time by the same holder, the number of full shares of Common Stock issuable
upon conversion shall be computed on the basis of the aggregate number of shares
of Class M Voting Preferred Stock formerly represented by the certificates so
surrendered.
9.6 In the event of an adjustment to the ''Conversion Rate'' in effect with
respect to the ESOP Convertible Preferred Stocks, a corresponding adjustment
shall be made to the Conversion Rate with respect to the Class M Voting
Preferred Stock.
Section 10. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of any shares
of Class M Voting Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
PART VI
Class S ESOP Voting Junior Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part VI to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part VI.
Section 1. Number of Shares; Designation; Issuances; Automatic Conversion.
1.1 The Class S ESOP Voting Junior Preferred Stock of the Corporation (the
''Class S Voting Preferred Stock'') shall consist of 4,200,000 shares, par value
$0.01 per share.
1.2 Shares of Class S Voting Preferred Stock shall be issued only to a trustee
or trustees acting on behalf of (i) the UAL Corporation Employee Stock Ownership
Plan (the ''ESOP''), (ii) the UAL Corporation Supplemental ESOP (the
''Supplemental ESOP'') or (iii) any other employee stock ownership trust or plan
or other employee benefit plan of the Corporation or any of its subsidiaries
(each, a ''Plan''). In the event of any sale, transfer or other disposition
(including, without limitation, upon a foreclosure or other realization upon
shares of Class S Voting Preferred Stock pledged as security for any loan or
loans made to a Plan or to the trustee or the trustees acting on behalf of a
Plan) (hereinafter a ''transfer'') of shares of Class S Voting Preferred Stock
to any person (including, without limitation, any participant in a Plan) other
than (x) any Plan or trustee or trustees of a Plan or (y) any pledgee of such
shares acquiring such shares as security for any loan or loans made to the Plan
or to any trustee or trustees acting on behalf of the Plan, the shares of Class
S Voting Preferred Stock so transferred, upon such transfer and without any
further action by the Corporation or the holder, shall be automatically
converted into shares of Common Stock at the applicable Conversion Rate in
accordance with Section 9 hereof and thereafter such transferee shall not have
any of the voting powers, preferences or relative, participating, optional or
special rights ascribed to shares of Class S Voting Preferred Stock hereunder,
but, rather, shall have only the powers and rights pertaining to the Common
Stock into which such shares of Class S Voting Preferred Stock shall be so
converted. In the event of any such automatic conversion provided for in this
Section 1.2, such transferee shall be treated for all purposes as the record
holder of the shares of Common Stock into which the Class S Voting Preferred
Stock shall have been converted as of the date of such conversion. Certificates
representing shares of Class S Voting Preferred Stock shall be legended to
reflect such consequences of a transfer. The shares of Common Stock issued upon
any conversion in accordance with Section 9 hereof or this Section 1.2 may be
transferred by the holder thereof as permitted by law.
Section 2. Definitions. For purposes of the Class S Voting Preferred
Stock, the following terms shall have the meanings indicated:
2.1 ''Available Unissued ESOP Shares'' shall have the meaning set forth in
Article FIFTH, Section 1.5 of this Restated Certificate.
73
2.2 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee of such board of directors authorized by such board
of directors to perform any of its responsibilities with respect to the Class S
Voting Preferred Stock.
2.3 ''Business Day'' shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
2.4 ''Class 1 ESOP Convertible Preferred Stock'' shall mean the Class 1 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
2.5 ''Class 2 ESOP Convertible Preferred Stock'' shall mean the Class 2 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
2.6 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
2.7 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.9 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.10 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
2.11 ''Class S Voting Preferred Stock'' shall have the meaning set forth in
Section 1 hereof.
2.12 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.13 ''Common Stock'' shall mean the common stock, par value $0.01 per share,
of the Corporation.
2.14 ''Conversion Rate'' shall have the meaning set forth in Section 9.1
hereof.
2.15 ''Current Market Price'' of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the Corporation or
any other issuer for any day shall mean the last reported sales price, regular
way on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the New York Stock Exchange Composite Tape or, if such security
is not listed or admitted for trading on the New York Stock Exchange, Inc.
(''NYSE''), on the principal national securities exchange on which such security
is listed or admitted for trading or quoted or, if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market or, if such security is not quoted on such National Market, the average
of the closing bid and asked prices on such day in the over-the-counter market
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System (''NASDAQ'') or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the average of the bid and
asked prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of Directors.
2.16 ''Director Preferred Stocks'' shall mean, collectively, the Class I
Preferred Stock, the Class Pilot MEC Preferred Stock, the Class IAM Preferred
Stock and the Class SAM Preferred Stock.
74
2.17 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class
1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred
Stock.
2.18 ''Issue Date'' shall mean the first date on which shares of Class S
Voting Preferred Stock are issued.
2.19 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.20 ''Measuring Date'' shall mean that date which is the 365th day following
the Issue Date.
2.21 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.22 ''Salaried/Management Fraction'' shall mean 0.1664.
2.23 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.24 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.25 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.26 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.27 [Reserved]
2.28 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class S
Voting Preferred Stock as to distributions upon liquidation, dissolution or
winding up of the Corporation are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar agent, then
''set apart for payment'' with respect to the Class S Voting Preferred Stock
shall mean, with respect to such distributions, placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar agent.
2.29 ''Termination Date'' shall have the meaning set forth in Article FIFTH,
Section 1.72 of this Restated Certificate.
2.30 ''Trading Day'' shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading or quoted on the NYSE, on the principal national securities exchange on
which such securities are listed or admitted, or if not listed or admitted for
trading or quoted on any national securities exchange, on the Nasdaq National
Market, or if such securities are not quoted on such National Market, in the
applicable securities market in which the securities are traded.
2.31 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class S Voting Preferred Stock.
2.32 ''Voting Fraction'' shall mean 0.55 with respect to votes and consents
that have a record date on or prior to the Measuring Date and a fraction that is
equivalent to the Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March 25, 1994, among the
Corporation, the Air Line Pilots
75
Association, International and International Association of Machinists and
Aerospace Workers, as amended from time to time) as in effect at the close of
business on the Measuring Date with respect to votes and consents that have a
record date after the Measuring Date.
2.33 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting
Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends. The holders of shares of the Class S Voting
Preferred Stock as such shall not be entitled to receive any dividends or other
distributions (except as provided in Section 4 below).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class S Voting Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of the Corporation,
the holders of the shares of Class S Voting Preferred Stock shall be entitled to
receive $0.01 per share of Class S Voting Preferred Stock (the ''Liquidation
Preference''), but such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable among the holders
of the shares of Class S Voting Preferred Stock shall be insufficient to pay in
full the Liquidation Preference and the liquidation preference on all other
shares of any class or series of stock of the Corporation that ranks on a parity
with the Class S Voting Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation, then such assets, or
the proceeds thereof, shall be distributed among the holders of shares of Class
S Voting Preferred Stock and any such other parity stock ratably in accordance
with the respective amounts that would be payable on such shares of Class S
Voting Preferred Stock and any such other parity stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with or into one or more
corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class of
stock ranking prior to or on a parity with the Class S Voting Preferred Stock as
to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holders of the Class S
Voting Preferred Stock, as and to the fullest extent provided in this Section 4,
any other series or class of stock of the Corporation that ranks junior to the
Class S Voting Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up of the Corporation, shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the Class S
Voting Preferred Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. All shares of Class S Voting Preferred
Stock which shall have been issued and reacquired in any manner by the
Corporation shall be retired and shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Class S Voting Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of such
class or series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of Class S Voting Preferred Stock;
(b) on a parity with the Class S Voting Preferred Stock as to the
distribution of assets upon liquidation, dissolution or winding up, whether or
not the liquidation prices per share thereof be different from those of the
Class S Voting Preferred Stock, if the holders of such class or series and the
Class S Voting Preferred Stock
76
shall be entitled to the receipt of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective liquidation
preferences, without preference or priority one over the other; and
(c) junior to the Class S Voting Preferred Stock, as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of Class S
Voting Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in preference or
priority to the holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred Stock, the Series D
Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to
rank prior to the Class S Voting Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The other Voting Preferred Stocks
and the Director Preferred Stocks shall each be deemed to rank on a parity with
the Class S Voting Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock and the Series C Preferred Stock
shall each be deemed to rank junior to the Class S Voting Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation shall enter into any consolidation, merger, share
exchange or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are to be exchanged solely for or changed,
reclassified or converted solely into stock of any successor, resulting or other
company (including the Corporation) (each of the foregoing is referred to herein
as ''Merger Transaction'') that constitutes ''qualifying employer securities''
with respect to holders of Class S Voting Preferred Stock within the meaning of
Section 409(l) of the Code and Section 407(d)(5) of the Employee Retirement
Income Security Act of 1974, as amended, or any successor provisions of law,
and, if applicable, for a cash payment in lieu of fractional shares, if any,
proper provisions shall be made so that upon consummation of such transaction,
the shares of Class S Voting Preferred Stock shall be converted into or
exchanged for preferred stock of such successor, resulting or other company (the
''New Salaried/Management Voting Preferred Stock''), having in respect of such
company, except as provided below, the same powers, preferences and relative,
participating, optional or other special rights (including the rights provided
by this Section 7), and the qualifications, limitations or restrictions thereof,
that the Class S Voting Preferred Stock had, in respect of the Corporation,
immediately prior to such transaction, except that after such transaction each
share of such New Salaried/Management Voting Preferred Stock so received in such
transaction upon conversion or exchange of the Class S Voting Preferred Stock
shall be convertible, otherwise on the terms and conditions provided by Section
9 hereof, into the number and kind of ''qualifying employer securities''
receivable in such transaction by a holder of the number of shares of Common
Stock into which a share of Class S Voting Preferred Stock could have been
converted immediately prior to such transaction; provided, however, that the
holder of each share of New Salaried/Management Voting Preferred Stock shall be
entitled to a number of votes per share equal to a fraction, the numerator of
which is the product of (x) the Salaried/Management Fraction and (y) the
aggregate number of votes that would be entitled to be cast by the holders of
the securities of the surviving, resulting or other corporation into which the
ESOP Convertible Preferred Stocks are changed, reclassified or converted
(collectively, the ''New ESOP Convertible Preferred Stocks'') upon consummation
of such transaction (assuming for such purpose the conversion of the New ESOP
Convertible Preferred Stocks), and the denominator of which is the aggregate
number of shares of New Salaried/Management Voting Preferred Stock then
outstanding; provided, further that if by virtue of the structure of such
transaction, a holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by the holders of the
Class S Voting Preferred Stock, then the shares of New Salaried/Management
Voting Preferred Stock received in such transaction upon conversion or exchange
of Class S Voting Preferred Stock shall, by virtue of such transaction and on
the same terms as apply to the holders of Common Stock, be convertible into or
exchangeable solely for ''qualifying employer securities'' (together, if
applicable, with a cash payment in lieu of fractional shares) with the effect
provided above on the basis of the number and kind of qualifying employer
securities receivable in such transaction by a holder of the number of shares of
Common Stock into which such shares of Class S Voting Preferred Stock could have
been converted immediately prior to such transaction (provided that if the kind
or amount of qualifying employer securities receivable in such transaction is
not the same for each such share of Common Stock, then the kind and amount so
77
receivable in such transaction for each share of Common Stock for this purpose
shall be deemed to be the kind and amount so receivable per share by the
plurality of such shares of Common Stock). The rights of the New
Salaried/Management Voting Preferred Stock so received in such transaction upon
conversion or exchange of the Class S Voting Preferred Stock shall successively
be subject to adjustment pursuant to Section 9 hereof following such transaction
as nearly equivalent to the adjustments provided for by such Section prior to
such transaction.
7.2 In case the Corporation shall enter into any Merger Transaction, however
named, pursuant to which the outstanding shares of Common Stock are exchanged
for or changed, reclassified or converted into other stock or securities or cash
or any other property, or any combination thereof, other than any such
consideration which is constituted solely of ''qualifying employer securities''
(as referred to in Section 7.1) and cash payments, if applicable, in lieu of
fractional shares, proper provisions shall be made so that each outstanding
share of Class S Voting Preferred Stock shall, by virtue of and upon
consummation of such transaction, on the same terms as are applicable to the
holders of Common Stock, be converted into or exchanged for the aggregate amount
of stock, securities, cash or other property (payable in like kind) receivable
by holders of the number of shares of Common Stock into which such shares of
Class S Voting Preferred Stock could have been converted immediately prior to
such transaction; provided, however, that if by virtue of the structure of such
transaction, a holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by holders of the Class S
Voting Preferred Stock, then the shares of Class S Voting Preferred Stock shall,
by virtue of such transaction and on the same terms as apply to the holders of
Common Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in kind) receivable by a holder of
the number of shares of Common Stock into which such shares of Class S Voting
Preferred Stock could have been converted immediately prior to such transaction
if such holder of Common Stock failed to exercise any rights of election to
receive any kind or amount of stock, securities, cash or other property
receivable in such transaction (provided that if the kind or amount of stock,
securities, cash or other property receivable in such transaction are not the
same for each non-electing share, then the kind and amount of stock, securities,
cash or other property so receivable upon such transaction for each non-electing
share shall be the kind and amount so receivable per share by the plurality of
the non-electing shares).
7.3 In case the Corporation shall enter into any agreement providing for any
Merger Transaction described in Section 7.1 or 7.2, then the Corporation shall
as soon as practicable thereafter (and in any event at least fifteen (15)
Business Days before consummation of such transaction) give notice of such
agreement and the material terms thereof to each holder of Class S Voting
Preferred Stock. The Corporation shall not consummate any such Merger
Transaction unless all of the terms of this Section 7 have been complied with.
Section 8. Voting. The holders of shares of Class S Voting Preferred Stock
shall have the following voting rights:
8.1 Except as otherwise required by law or provided in this Restated
Certificate, the holders of Class S Voting Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the holders of Common Stock of the
Corporation, voting together as a single class with the holders of Common Stock
and the holders of such other classes and series of stock that vote together
with the Common Stock as a single class; provided, however, that prior to the
Termination Date, the holders of Class S Voting Preferred Stock shall not be
entitled to vote with respect to the election of the members of the Board of
Directors. For purposes of this Section 8.1, with respect to any vote or consent
with a record date occurring prior to the Termination Date, (a) the holders of
the shares of Class S Voting Preferred Stock from time to time outstanding
shall, collectively, be entitled to a number of votes (rounded to the nearest
whole vote) equal to the excess of (i) the product of (I) the
Salaried/Management Fraction, (II) the Voting Fraction and (III) a fraction, the
numerator of which shall be the number of votes entitled to be cast on the
matter by the holders of all outstanding securities of the Corporation
(excluding the Voting Preferred Stocks and the shares of Common Stock issued
upon conversion of the ESOP Convertible Preferred Stocks and held on the
applicable record date in the ESOP or the Supplemental ESOP), and the
denominator of which shall be the excess of one (1.0) over the Voting Fraction,
over (ii) the sum of (A) the aggregate number of shares of Common Stock held
under the ESOP or the Supplemental ESOP which have been issued upon conversion
of the ESOP Convertible Preferred Stocks and have been, on the applicable record
date, allocated under the ESOP or the Supplemental ESOP to the accounts of
individuals who are members of the Salaried/Management Employee Group (as
defined in the ESOP),
78
(B) the product of (x) the number of shares of Common Stock held under the ESOP
which have been issued upon conversion of the Class 1 ESOP Convertible Preferred
Stock and are held on the applicable record date in the Loan Suspense Account
(as defined in the ESOP) under the ESOP multiplied by (y) the Salaried/
Management Fraction, and (C) the product of (aa) the number of shares of Common
Stock held by the Supplemental ESOP which have been issued upon conversion of
the Class 2 ESOP Convertible Preferred Stock and are held on the applicable
record date in the Phantom Suspense Account (as defined in the Supplemental
ESOP) under the Supplemental ESOP multiplied by (bb) the Salaried/Management
Fraction (the excess of clause (i) over clause (ii) being referred to herein as
the ''Attributed Votes''); and (b) the holder of each share of the Class S
Voting Preferred Stock shall be entitled to a number of votes per share (rounded
to the nearest one hundred millionth of a vote) equal to the result of dividing
(x) the number of Attributed Votes by (y) the number of shares of Class S Voting
Preferred Stock outstanding on the applicable record date. With respect to each
vote or consent with a record date occurring on or after the Termination Date,
each share of Class S Voting Preferred Stock then outstanding shall be entitled
to the number of votes per share (rounded to the nearest one hundred millionth
of a vote) equal to a fraction, the numerator of which is the product of (i) the
sum of (x) the number of shares of Common Stock into which the ESOP Convertible
Preferred Stocks then outstanding can be converted as of the record date with
respect to such vote or consent and (y) the number of Available Unissued ESOP
Shares as of such record date and (ii) the Salaried/Management Fraction, and the
denominator of which is the number of shares of Class S Voting Preferred Stock
outstanding as of such record date. For purposes of this Section 8.1, the
Corporation shall certify to the holders of Class S Voting Preferred Stock and
to the judges or similar officials appointed for the purpose of tabulating votes
at any meeting of stockholders as soon as practicable following the record date
for the determination of stockholders entitled to notice of or to vote at any
meeting of stockholders, but in no event less than five Trading Days before such
meeting, with respect to record dates prior to the Termination Date, the number
of shares of Common Stock then outstanding and the number of votes entitled to
be cast on the matter or matters in question by the holders of all outstanding
securities of the Corporation (excluding the Voting Preferred Stocks and the
shares of Common Stock issued upon conversion of the ESOP Convertible Preferred
Stocks and held on the applicable record date in the ESOP or the Supplemental
ESOP) and, with respect to record dates from and after the Termination Date, the
number of shares of Common Stock into which a share of ESOP Convertible
Preferred Stock was convertible as of the record date for such vote or votes.
The Corporation shall be deemed to satisfy the requirements of the preceding
sentence if such matters are specified in any proxy statement mailed to all
stockholders entitled to vote on such matter or matters.
Prior to the Termination Date, the outstanding shares of the Voting Preferred
Stocks, the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock and
the Class SAM Preferred Stock, together with the shares of Common Stock held by
the ESOP and the Supplemental ESOP that were received upon conversion of the
ESOP Preferred Stocks, will represent the Voting Fraction (expressed as a
percentage) of the votes to be cast in connection with matters (other than the
election of directors) submitted to the vote of the holders of the Common Stock
and the holders of all other outstanding securities that vote as a single class
together with the Common Stock. Subject to any amendment of this Restated
Certificate after the date hereof, it is the intent of this Restated Certificate
that this Section 8.1 (with respect to the Class S Voting Preferred Stock),
Article FOURTH, Part V, Section 8.1 of the Restated Certificate (with respect to
the Class M Voting Preferred Stock) and Article FOURTH, Part IV, Section 8.1 of
the Restated Certificate (with respect to the Class P Voting Preferred Stock) be
interpreted together to achieve the foregoing result.
8.2 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class S Voting Preferred Stock shall then be required by law or
this Restated Certificate, and in addition to any other vote required by law or
this Restated Certificate, the affirmative vote or written consent of the
holders of at least a majority of all of the outstanding shares of Class S
Voting Preferred Stock, voting separately as a class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal
(including any amendment, alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of the Class S Voting Preferred
Stock or of either of the ESOP Convertible Preferred Stocks.
79
8.3 For purposes of the foregoing provisions of Section 8.2, each share of
Class S Voting Preferred Stock shall have one (1) vote per share.
8.4 Notwithstanding anything to the contrary in Section 7 or 8.1, if at any
time prior to the Termination Date, (x) the trustee under either (i) the ESOP or
(ii) the Supplemental ESOP (together with the ESOP, the ''Employee Plan'')
either (a) fails to solicit, in accordance with the Employee Plan, timely
instructions from Employee Plan participants, the Committee of the ESOP (as
defined in the ESOP and hereinafter referred to as the ''ESOP Committee'') or
the Committee of the Supplemental ESOP (as defined in the Supplemental ESOP and,
together with the ESOP Committee, the ''Committees''), as applicable
(''Instructions''), with respect to any matter referred to in clause (y) below,
or (b) fails to act in accordance with such Instructions with respect to any
matter referred to in clause (y) below (but only if such failure to follow such
Instructions is attributable to (i) the trustee having concluded that, based
upon the terms of such transaction, the trustee's fiduciary duties require the
trustee to fail to follow such instructions or (ii) the unenforceability of the
provisions of the ESOP and/or the Supplemental ESOP relating to the solicitation
and/or following of such Instructions); (y) either (i) but for the provisions of
Article FOURTH, Part VII, Subsection 8.3(a), Article FOURTH, Part VIII,
Subsection 8.3(a) and Article FOURTH, Part IX, Subsection 8.3(a) of this
Restated Certificate, the vote of the stockholders of the Corporation would have
been sufficient, under applicable law, stock exchange listing requirements and
this Restated Certificate, as applicable, to approve the Merger Transaction or
other Control Transaction (as defined in the ESOP) in question (or, if no
stockholder approval would be required by this Restated Certificate, applicable
stock exchange listing requirements or applicable law, the trustee enters into a
binding commitment in connection with a Control Transaction or a Control
Transaction is consummated) or (ii) following the Issue Date, the trustee
disposes of an aggregate of 10% or more of the Common Equity (as defined in
Article FIFTH, Section 1.26 of this Restated Certificate) initially represented
by the ESOP Convertible Preferred Stocks other than in connection with Employee
Plan distributions or diversification requirements; and (z) any of the following
occur: (a) Instructions with respect to a matter are given, the trustee fails to
follow such Instructions and such transaction would not have been approved by
stockholders of the Corporation in accordance with the applicable provisions of
this Restated Certificate (excluding Article FOURTH, Part VII, Subsection
8.3(a), Article FOURTH, Part VIII, Subsection 8.3(a) and Article FOURTH, Part
IX, Subsection 8.3(a) of this Restated Certificate), applicable stock exchange
listing requirements or applicable law if the trustee had acted in accordance
with such Instructions (or, if no vote of stockholders would be required by this
Restated Certificate, applicable stock exchange listing requirements or
applicable law, such action by the trustee in respect of such transaction as to
which Instructions were so given would not have been authorized had the trustee
acted in accordance with such Instructions, (b) the trustee fails to solicit
timely Instructions with respect to such matters, such transaction requires the
approval of stockholders of the Corporation under applicable provisions of this
Restated Certificate, applicable stock exchange listing requirements or
applicable law and such approval would not have been obtained (without regard to
the provisions of Article FOURTH, Part VII, Subsection 8.3(a), Article FOURTH,
Part VIII, Subsection 8.3(a) and Article FOURTH, Part IX, Subsection 8.3(a) of
this Restated Certificate) if the trustee had voted against such transaction all
of the votes entitled to be cast by such trustee as the holder of securities of
the Corporation held under the Employee Plan, or (c) the trustee fails to follow
Instructions or to solicit timely Instructions with respect to such matter and
no vote of stockholders of the Corporation is required by the Restated
Certificate, applicable stock exchange listing requirements or applicable law to
approve such transaction (an action or inaction by the trustee under clauses (x)
and (z) in connection with a transaction referred to in clause (y) being
referred to herein as an ''Uninstructed Trustee Action''); then each outstanding
share of Class S Voting Preferred Stock shall, immediately and automatically,
without any further action on the part of holders thereof or of the Corporation,
be converted into shares of Common Stock at the applicable Conversion Rate in
accordance with Section 9 hereof.
Section 9. Automatic Conversion.
9.1 Shares of Class S Voting Preferred Stock shall, as provided in Sections
1.2 and 8.4, be automatically converted, from time to time, in part or in whole,
respectively, upon (i) any transfer thereof other than a transfer described in
clauses (x) and (y) of Section 1.2 or (ii) an Uninstructed Trustee Action as
described in Section 8.4, at a rate of one ten thousandth of a share of Common
Stock per share of Class S Voting Preferred Stock to be converted (the
''Conversion Rate'').
80
9.2 At the time that all of the shares of the ESOP Convertible Preferred
Stocks cease to be outstanding for any reason whatsoever, including, without
limitation, their conversion in full into Common Stock (the ''Final Conversion
Date''), all outstanding shares of Class S Voting Preferred Stock shall be
automatically converted, in full, into shares of Common Stock at the Conversion
Rate then in effect.
9.3 Following any conversion in accordance with Sections 9.1 and 9.2, (i) no
holder of Class S Voting Preferred Stock shall have any of the voting powers,
preferences, relative, participating, optional or special rights ascribed to
shares of Class S Voting Preferred Stock hereunder, but, rather, shall have only
the powers and rights pertaining to the Common Stock into which such shares of
Class S Voting Preferred Stock have been so converted, and (ii) any holder of
Class S Voting Preferred Stock shall be treated for all purposes as the record
holder of the shares of Common Stock into which the Class S Voting Preferred
Stock shall have been converted as of the date of the conversion of the shares
of Class S Voting Preferred Stock.
9.4 On or after the date of (i) a transfer of shares of Class S Voting
Preferred Stock (other than as described in clauses (x) and (y) of Section 1.2),
(ii) the Final Conversion Date or (iii) an Uninstructed Trustee Action, each
holder of a certificate or certificates formerly representing shares of Class S
Voting Preferred Stock converted in accordance with Sections 9.1 and 9.2 shall
surrender such certificate or certificates, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent (if other than the
Corporation) in the Borough of Manhattan, City of New York. Unless the shares
issuable on conversion are to be issued in the same name as the name in which
such certificate is registered, each such certificate shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid or that no such taxes
are payable).
9.5 No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon conversion of the Class S Voting Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Class S Voting
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than one certificate shall
be surrendered in respect of such conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon conversion shall be computed
on the basis of the aggregate number of shares of Class S Voting Preferred Stock
formerly represented by the certificates so surrendered.
9.6 In the event of an adjustment to the ''Conversion Rate'' in effect with
respect to the ESOP Convertible Preferred Stocks, a corresponding adjustment
shall be made to the Conversion Rate with respect to the Class S Voting
Preferred Stock.
Section 10. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of any shares
of Class S Voting Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
PART VII
Class Pilot MEC Junior Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part VII to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part VII.
Section 1. Number of Shares; Designation; Issuance; Restrictions on
Transfer.
81
1.1 The Class Pilot MEC Junior Preferred Stock of the Corporation (the ''Class
Pilot MEC Preferred Stock'') shall consist of one (1) share, par value $0.01.
1.2 The share of Class Pilot MEC Preferred Stock shall be issued only to (i)
the United Airlines Pilots Master Executive Council of the Air Line Pilots
Association, International (''ALPA'') pursuant to ALPA's authority as the
collective bargaining representative for the crafts or class of pilots employed
by United Air Lines, Inc. (the ''MEC'') or (ii) a duly authorized agent acting
for the benefit of the MEC. Any purported sale, transfer, pledge or other
disposition (hereinafter a ''transfer'') of the share of Class Pilot MEC
Preferred Stock to any person, other than a successor to the MEC or a duly
authorized agent acting for the benefit of such successor, shall be null and
void and of no force and effect. Upon any purported transfer of the share of
Class Pilot MEC Preferred Stock by the holder thereof other than as expressly
permitted above, and without any further action by the Corporation or such
holder, such share shall, to the extent of funds legally available therefor and
subject to the other provisions of this Restated Certificate, be automatically
redeemed by the Corporation in accordance with Section 9 hereof, and thereupon
such share shall no longer be deemed outstanding, and neither such holder nor
any purported transferee thereof shall have in respect thereof any of the voting
powers, preferences or relative, participating, optional or special rights
ascribed to the share of Class Pilot MEC Preferred Stock hereunder, but rather
such holder thereafter shall only be entitled to receive the amount payable upon
redemption in accordance with Section 9. The certificate representing the share
of Class Pilot MEC Preferred Stock shall be legended to reflect the restrictions
on transfer and automatic redemption provided for herein.
Section 2. Definitions. For purposes of the Class Pilot MEC Preferred
Stock, the following terms shall have the meanings indicated:
2.1 ''Affiliate'' shall have the meaning defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended, or any successor thereto.
2.2 ''ALPA Termination Date'' shall have the meaning set forth in Section 8
hereof.
2.3 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee thereof authorized by such board of directors to
perform any of its responsibilities with respect to the Class Pilot MEC
Preferred Stock.
2.4 ''Business Day'' shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
2.5 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
2.6 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.7 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.9 ''Class Pilot MEC Preferred Stock'' shall have the meaning set forth in
Section 1 hereof.
2.10 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.11 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
82
2.12 ''Common Stock'' shall mean the common stock, par value $0.01 per share,
of the Corporation.
2.13 ''Director Preferred Stocks'' shall mean, collectively, the Class I
Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred
Stock and the Class SAM Preferred Stock.
2.14 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class
1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred
Stock, each of the par value of $0.01 per share, of the Corporation.
2.15 ''Issue Date'' shall mean the first date on which shares of Class Pilot
MEC Preferred Stock are issued.
2.16 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.17 ''Measuring Date'' shall mean that date which is the 365th day following
the Issue Date.
2.18 ''Pilot Fraction'' shall mean 0.4623.
2.19 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.20 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.21 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.22 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.23 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.24 [Reserved]
2.25 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class Pilot
MEC Preferred Stock as to distributions upon liquidation, dissolution or winding
up of the Corporation are placed in a separate account of the Corporation or
delivered to a disbursing, paying or other similar agent, then ''set apart for
payment'' with respect to the Class Pilot MEC Preferred Stock shall mean, with
respect to such distributions, placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
2.26 ''Termination Date'' shall have the meaning set forth in Article FIFTH,
Section 1.72 of this Restated Certificate.
2.27 ''Trading Day'' shall mean any day on which the securities in question
are traded on the New York Stock Exchange, Inc. (the ''NYSE''), or if such
securities are not listed or admitted for trading or quoted on the NYSE, on the
principal national securities exchange on which such securities are listed or
admitted, or if not listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if such securities are
not quoted on such National Market, in the applicable securities market in which
the securities are traded.
83
2.28 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class Pilot MEC Preferred Stock.
2.29 ''Voting Fraction'' shall mean 0.55 with respect to votes or consents
that have a record date on or prior to the Measuring Date, and a fraction that
is equivalent to the Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March 25, 1994, among the
Corporation, the Air Line Pilots Association, International and International
Association of Machinists and Aerospace Workers, as amended from time to time)
as in effect at the close of business on the Measuring Date with respect to
votes and consents that have a record date after the Measuring Date.
2.30 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting
Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends. The holder of the share of Class Pilot MEC Preferred
Stock as such shall not be entitled to receive any dividends or other
distributions (except as provided in Section 4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class Pilot MEC Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up of the Corporation,
the holder of the share of Class Pilot MEC Preferred Stock shall be entitled to
receive $0.01 per share of Class Pilot MEC Preferred Stock (the ''Liquidation
Preference''), but such holder shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable to the holder of the
share of Class Pilot MEC Preferred Stock shall be insufficient to pay in full
the Liquidation Preference and the liquidation preference on all other shares of
any class or series of stock of the Corporation that ranks on a parity with the
Class Pilot MEC Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up of the Corporation, then such assets, or the proceeds
thereof, shall be distributed among the holders of the share of Class Pilot MEC
Preferred Stock and any such other parity stock ratably in accordance with the
respective amounts that would be payable on such share of Class Pilot MEC
Preferred Stock and any such other parity stock if all amounts payable thereon
were paid in full. For the purposes of this Section 4, (i) a consolidation or
merger of the Corporation with or into one or more corporations, or (ii) a sale,
lease, exchange or transfer of all or substantially all of the Corporation's
assets, shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
4.2 Subject to the rights of the holders of shares of any series or class of
stock ranking prior to or on a parity with the Class Pilot MEC Preferred Stock
as to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holder of the share of
Class Pilot MEC Preferred Stock, as and to the fullest extent provided in this
Section 4, any series or class of stock of the Corporation that ranks junior to
the Class Pilot MEC Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up of the Corporation, shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holder
of the share of Class Pilot MEC Preferred Stock shall not be entitled to share
therein.
Section 5. Shares to be Retired. The share of Class Pilot MEC Preferred
Stock which shall have been issued and reacquired in any manner (other than
redemption pursuant to Section 9.1) by the Corporation shall be retired and
restored to the status of an authorized but unissued share of Class Pilot MEC
Preferred Stock and, in the event of the redemption of such share pursuant to
Section 9.1 hereof, shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall be deemed to rank:
84
(a) prior to the Class Pilot MEC Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of such
class or series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the holder
of Class Pilot MEC Preferred Stock;
(b) on a parity with the Class Pilot MEC Preferred Stock as to the
distribution of assets upon liquidation, dissolution or winding up, whether or
not the liquidation prices per share thereof be different from those of the
Class Pilot MEC Preferred Stock, if the holders of such class or series and
the Class Pilot MEC Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or winding up in
proportion to their respective liquidation preferences, without preference or
priority one over the other; and
(c) junior to the Class Pilot MEC Preferred Stock, as to the distribution
of assets upon liquidation, dissolution or winding up, if the holder of Class
Pilot MEC Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in preference or
priority to the holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred Stock, the Series D
Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to
rank prior to the Class Pilot MEC Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up. The other Director Preferred Stocks
and the Voting Preferred Stocks shall each be deemed to rank on a parity with
the Class Pilot MEC Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up. The Common Stock and the Series C
Preferred Stock shall each be deemed to rank junior to the Class Pilot MEC
Preferred Stock as to amounts distributable upon liquidation, dissolution or
winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation enters into any consolidation, merger, share
exchange or similar transaction, however named, involving the Corporation or its
subsidiary, United Air Lines, Inc. (''United'') (or any successor to all or
substantially all the assets or business of United), pursuant to which the
outstanding shares of Common Stock are to be exchanged for or changed,
reclassified or converted into securities of any successor or resulting or other
company (including the Corporation), or cash or other property (each of the
foregoing transactions is referred to herein as a ''Merger Transaction''),
proper provision shall be made so that, upon consummation of such transaction,
the share of Class Pilot MEC Preferred Stock shall be converted, reclassified or
changed into or exchanged for preferred stock of such successor or resulting or
other company having, in respect of such company, the same powers, preferences
and relative, participating, optional or other special rights (including the
rights provided by this Section 7), and the qualifications, limitations or
restrictions thereof, that the Class Pilot MEC Preferred Stock had, in respect
of the Corporation, immediately prior to such transaction; specifically
including, without limitation, the right, until the ALPA Termination Date, to
elect one member of the board of directors (or similar governing body) of such
company.
7.2 In case the Corporation shall enter into any agreement providing for any
Merger Transaction, then the Corporation shall as soon as practicable thereafter
(and in any event at least fifteen (15) Business Days before consummation of
such transaction) give notice of such agreement and the material terms thereof
to the holder of the share of Class Pilot MEC Preferred Stock. The Corporation
shall not consummate any such Merger Transaction unless all of the terms of this
Section 7 and Section 8 have been complied with.
Section 8. Voting. The holder of the share of Class Pilot MEC Preferred
Stock shall have the following voting rights:
8.1 Until the later of (i) the Termination Date and (ii) such time as there
are no longer any persons represented by the Air Line Pilots Association,
International (or any successor organization) employed by the Corporation or any
of its Affiliates (the ''ALPA Termination Date''), the holder of the share of
Class Pilot MEC Preferred Stock shall have the right (a) voting as a separate
class, to elect one Class Pilot MEC Director (as defined in Article FIFTH,
Section 2.2 of this Restated Certificate) to the Board of Directors and (b)
voting together as a single class
85
with the holders of Common Stock and the holders of such other classes or series
of stock that vote together with the Common Stock as a single class, to vote on
all matters submitted to a vote of the holders of Common Stock of the
Corporation (other than the election of Public Directors, as defined in Article
FIFTH, Section 2.3), except as otherwise required by law.
8.2 Notwithstanding anything to the contrary in Section 7.1, 7.2 or 8.1, if at
any time prior to the Termination Date, (x) the trustee under either (i) the UAL
Corporation Employee Stock Ownership Plan (the ''ESOP'') or (ii) the UAL
Corporation Supplemental ESOP (together with the ESOP, the ''Plan'') either (a)
fails to solicit, in accordance with the Plan, timely instructions from Plan
participants, the Committee of the ESOP (as defined in the ESOP and hereinafter
referred to as the ''ESOP Committee'') or the Committee of the Supplemental ESOP
(as defined in the Supplemental ESOP and, together with the ESOP Committee, the
''Committees''), as applicable (''Instructions''), with respect to any matter
referred to in clause (y) below, or (b) fails to act in accordance with such
Instructions with respect to any matter referred to in clause (y) below (but
only if such failure to follow such Instructions is attributable to (i) the
trustee having concluded that, based upon the terms of such transaction, the
trustee's fiduciary duties require the trustee to fail to follow such
Instructions or (ii) the unenforceability of the provisions of the ESOP and/or
the Supplemental ESOP relating to the solicitation and/or following of such
Instructions); (y) either (i) but for the provisions of Subsection 8.3(a) and
Article FOURTH, Part VIII, Subsection 8.3(a) and Article FOURTH, Part IX,
Subsection 8.3(a) of this Restated Certificate, the vote of the stockholders of
the Corporation would have been sufficient, under applicable law, stock exchange
listing requirements and this Restated Certificate, as applicable, to approve
the Merger Transaction or other Control Transaction (as defined in the ESOP) in
question (or, if no stockholder approval would be required by this Restated
Certificate, applicable stock exchange listing requirements or applicable law,
the trustee enters into a binding commitment in connection with a Control
Transaction or a Control Transaction is consummated) or (ii) following the Issue
Date, the trustee disposes of an aggregate of 10% or more of the Common Equity
(as defined in Article FIFTH, Section 1.26 of this Restated Certificate)
initially represented by the ESOP Convertible Preferred Stocks other than in
connection with Plan distributions; and (z) any of the following occur: (a)
Instructions with respect to a matter are given, the trustee fails to follow
such Instructions and such transaction would not have been approved by
stockholders of the Corporation in accordance with the applicable provisions of
this Restated Certificate (excluding Subsection 8.3(a) and Article FOURTH, Part
VIII, Subsection 8.3(a) and Article FOURTH, Part IX, Subsection 8.3(a) of this
Restated Certificate), applicable stock exchange listing requirements or
applicable law if the trustee had acted in accordance with such Instructions
(or, if no vote of stockholders would be required by this Restated Certificate,
applicable stock exchange listing requirements or applicable law, such action by
the trustee in respect of such transaction as to which Instructions were so
given would not have been authorized had the trustee acted in accordance with
such Instructions), (b) the trustee fails to solicit timely Instructions with
respect to such matters, such transaction requires the approval of stockholders
of the Corporation under applicable provisions of this Restated Certificate,
applicable stock exchange listing requirements or applicable law and such
approval would not have been obtained (without regard to Subsection 8.3(a) and
Article FOURTH, Part VIII, Subsection 8.3(a) and Article FOURTH, Part IX,
Subsection 8.3(a) of this Restated Certificate) if the trustee had voted against
such transaction all of the votes entitled to be cast by such trustee as the
holder of securities of the Corporation held under the Plan, or (c) the trustee
fails to follow Instructions or to solicit timely Instructions with respect to
such matter and no vote of stockholders of the Corporation is required by the
Restated Certificate, applicable stock exchange listing requirements or
applicable law to approve such transaction (an action or inaction by the trustee
under clauses (x) and (z) in connection with a transaction referred to in clause
(y) being referred to herein as an ''Uninstructed Trustee Action''); then, (I)
the Merger Transaction or other Control Transaction referred to in clause (y)(i)
of Section 8.2 involving an Uninstructed Trustee Action, if it requires
stockholder approval under applicable law, stock exchange listing requirements
or this Restated Certificate, must also be approved by the vote of stockholders
described in Subsection 8.3(a), and (II) from and after such Uninstructed
Trustee Action, in addition to the voting rights provided for under Section 8.1,
the share of Class Pilot MEC Preferred Stock shall have the voting rights set
forth in Subsection 8.3(b).
8.3 (a) In addition to any other vote or consent of stockholders required by
this Restated Certificate, applicable stock exchange listing requirements or
applicable law, any Merger Transaction or other Control Transaction referred to
in clause (y)(i) of Section 8.2 involving an Uninstructed Trustee Action that
requires stockholder approval under applicable law, stock exchange listing
requirements or this Restated Certificate must also be approved by at least a
majority of the votes entitled to be cast in respect of all outstanding shares
of the Class Pilot
86
MEC Preferred Stock, the Class IAM Preferred Stock, the Class SAM Preferred
Stock, the Common Stock and such other classes and series of stock that vote
together with the Common Stock as a single class (other than the Voting
Preferred Stocks), with all such shares voting, for purposes of this paragraph,
as a single class, and for purposes of such vote the Class Pilot MEC Preferred
Stock shall be entitled to cast a number of votes calculated in accordance with
Subsection 8.3(c).
(b) Except as otherwise required by law or provided in this Restated
Certificate, from and after an Uninstructed Trustee Action, the holder of the
share of Class Pilot MEC Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the holders of Common Stock, voting together as a
single class with the holders of Class IAM Preferred Stock, the holders of Class
SAM Preferred Stock, the holders of Common Stock and the holders of such other
classes and series of stock that vote together with the Common Stock as a single
class (other than the Voting Preferred Stocks) and for purposes of such vote the
Class Pilot MEC Preferred Stock shall be entitled to cast a number of votes
calculated in accordance with Subsection 8.3(c); provided, however, that, except
as provided in Section 8.1, prior to the Termination Date, the holder of the
share of Class Pilot MEC Preferred Stock shall not be entitled to vote with the
holders of Common Stock with respect to the election of the members of the Board
of Directors.
(c) With respect to any vote or consent (i) with respect to which the Class
Pilot MEC Preferred Stock is entitled to vote pursuant to Subsection 8.3(a) or
(ii) with respect to which the Class Pilot MEC Preferred Stock is entitled to
vote pursuant to Subsection 8.3(b) and the record date for which occurs after an
Uninstructed Trustee Action and prior to the Termination Date, the holder of the
share of Class Pilot MEC Preferred Stock shall be entitled to a number of votes
(rounded to the nearest whole vote) equal to the product of (I) the Pilot
Fraction, (II) the Voting Fraction and (III) a fraction, the numerator of which
shall be the number of votes entitled to be cast on the matter by the holders of
all outstanding securities of the Corporation (excluding the Class IAM Preferred
Stock and the Class SAM Preferred Stock), and the denominator of which shall be
the excess of one (1.0) over the Voting Fraction (the ''Attributed Vote''). If,
with respect to any matter as to which the immediately preceding sentence shall
apply, (i) shares of Common Stock are held under the ESOP or the Supplemental
ESOP which have been issued upon conversion of the ESOP Convertible Preferred
Stocks (''Subject Shares''), (ii) with respect to any action as to which the
trustee is required, in accordance with the terms of the ESOP or the
Supplemental ESOP, to solicit Instructions, the trustee has solicited such
Instructions and (iii) the trustee has voted some or all of the Subject Shares
in accordance with such Instructions (the shares which the trustee has voted in
accordance with such Instructions, ''Instructed Trustee Common Shares''), then
the Attributed Votes shall be reduced by the Pro Rata Reduction. The ''Pro Rata
Reduction'' shall equal, with respect to any such matter, the sum of (I) the
product of (x) a fraction, the numerator of which is the number of votes
represented by Subject Shares as to which members of the ALPA Employee Group (or
the Committees) gave Instructions to the trustee to vote in favor of the matter,
and the denominator of which is the number of votes represented by Subject
Shares as to which members of all Employee Groups (as defined in the ESOP) (or
the Committees) gave Instructions to the trustee to vote in favor of the matter
(such denominator being referred to as the ''Instructed Pro Vote'') and (y) the
number of votes represented by Subject Shares that the trustee actually voted in
favor of the matter (but in no event more than the Instructed Pro Vote); and
(II) the product of (x) a fraction, the numerator of which is the number of
votes represented by Subject Shares as to which members of the ALPA Employee
Group (or the Committees) gave instructions to the trustee to vote against the
matter, and the denominator of which is the number of votes represented by
Subject Shares as to which members of all Employee Groups (or the Committees)
gave Instructions to the trustee to vote against the matter (such denominator
being referred to as the ''Instructed Con Vote'') and (y) the number of votes
represented by Subject Shares that the trustee actually voted against the matter
(but in no event more than the Instructed Con Vote).
For purposes of this Section 8.3, the Corporation shall certify to the holders
of Class Pilot MEC Preferred Stock and to the judges or similar officials
appointed for the purpose of tabulating votes at any meeting of stockholders as
soon as practicable following the record date for the determination of
stockholders entitled to notice of or to vote at any meeting of stockholders,
but in no event less than five Trading Days before such meeting, the number of
shares of Common Stock then outstanding and the number of votes entitled to be
cast on the matter or matters in question by the holders of all outstanding
securities of the Corporation (excluding the Class IAM Preferred Stock and the
Class SAM Preferred Stock). The Corporation shall be deemed to satisfy the
requirements of the preceding sentence if such matters are specified in any
proxy statement mailed to all stockholders entitled to
87
vote on such matter or matters. With respect to any vote or consent as to which
the first sentence of this Subsection 8.3(c) applies, the outstanding share of
Class Pilot MEC Preferred Stock, together with the outstanding shares of the
Class IAM Preferred Stock and the outstanding shares of Class SAM Preferred
Stock, will represent the Voting Fraction (expressed as a percentage) of the
votes to be cast in connection with matters (other than the election of
directors) submitted to the vote of the holders of the Common Stock and the
holders of all other outstanding securities that vote as a single class together
with the Common Stock. Subject to any amendment of this Restated Certificate
after the date hereof, it is the intent of this Restated Certificate that this
Section 8.3 (with respect to the Class Pilot MEC Preferred Stock), Article
FOURTH, Part VIII, Section 8.3 of the Restated Certificate (with respect to the
Class IAM Preferred Stock), and Article FOURTH, Part IX, Section 8.3 of the
Restated Certificate (with respect to the Class SAM Preferred Stock), be
interpreted together to achieve the foregoing result. With respect to any vote
or consent as to which the first sentence of this Section 8.3(c) does not apply,
the Class Pilot MEC Preferred Stock shall not have any voting rights except as
provided by Sections 8.1, 8.2 and 8.4 and applicable law; provided, however,
that if the Termination Date occurs directly or indirectly as a result of an
Uninstructed Trustee Action then, notwithstanding anything to the contrary
contained herein, the voting rights of the Class Pilot MEC Preferred Stock set
forth in this Section 8.3 shall continue until the anniversary of the Issue Date
occurring in the year 2010. For purposes of the proviso in the immediately
preceding sentence, the Termination Date shall be deemed to have occurred as a
result of an Uninstructed Trustee Action if the Termination Date occurs within
one year of such Uninstructed Trustee Action.
8.4 The affirmative vote or written consent of the holder of the share of
Class Pilot MEC Preferred Stock, voting separately as a class, shall be
necessary for authorizing, effecting or validating the amendment, alteration or
repeal (including any amendment, alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of the Class Pilot MEC Preferred
Stock.
8.5 For purposes of the foregoing provisions of Sections 8.1 and 8.4, each
share of Class Pilot MEC Preferred Stock shall have one (1) vote per share.
Section 9. Redemption.
9.1 The share of Class Pilot MEC Preferred Stock shall, to the extent of funds
legally available therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed on the ALPA Termination Date, at a price
of $0.01 per share of Class Pilot MEC Preferred Stock, as provided hereinbelow.
As promptly as reasonably possible following the occurrence of the ALPA
Termination Date, the Corporation shall give notice thereof and of the
redemption under this Section 9 to the record holder of the Class Pilot MEC
Preferred Stock. From and after the redemption provided for in this Section 9.1,
all rights of the holder of the Class Pilot MEC Preferred Stock as such, except
the right to receive the redemption price of such shares upon the surrender of
the certificate formerly representing the same, shall cease and terminate and
such share shall not thereafter be deemed to be outstanding for any purpose
whatsoever.
9.2 The share of Class Pilot MEC Preferred Stock shall, to the extent of funds
legally available therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed upon any purported transfer thereof other
than as expressly permitted under Section 1.2. The redemption price to be paid
in connection with any redemption shall be $0.01 per share of Class Pilot MEC
Preferred Stock. Upon any such redemption, all rights of the holder of Class
Pilot MEC Preferred Stock as such, except the right to receive the redemption
price of such share upon the surrender of the certificate formerly representing
the same, shall cease and terminate and such share shall not thereafter be
deemed to be outstanding for any purpose whatsoever.
9.3 The holder of the share of Class Pilot MEC Preferred Stock so redeemed
pursuant to Section 9.1 or 9.2 shall present and surrender his certificate
formerly representing such share to the Corporation and thereupon the redemption
price of such share shall be paid to or on the order of the person whose name
appears on such certificate as the owner thereof and the surrendered certificate
shall be cancelled.
88
Section 10. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of the share of
Class Pilot MEC Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
PART VIII
Class IAM Junior Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part VIII to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part VIII.
Section 1. Number of Shares; Designation; Issuance; Restrictions on
Transfer.
1.1 The Class IAM Junior Preferred Stock of the Corporation (the ''Class IAM
Preferred Stock'') shall consist of one (1) share, par value $0.01.
1.2 The share of Class IAM Preferred Stock shall be issued only to (i) the
International Association of Machinists and Aerospace Workers (the ''IAM'')
pursuant to the IAM's authority as the collective bargaining representative for
the crafts or classes of mechanics and related employees, ramp and stores
employees, food service employees, dispatchers and security officers employed by
United Air Lines, Inc. or (ii) a duly authorized agent acting for the benefit of
the IAM. Any purported sale, transfer, pledge or other disposition (hereinafter
a ''transfer'') of the share of Class IAM Preferred Stock to any person, other
than a successor to the IAM or a duly authorized agent acting for the benefit of
such successor, shall be null and void and of no force and effect. Upon any
purported transfer of the share of Class IAM Preferred Stock by the holder
thereof other than as expressly permitted above, and without any further action
by the Corporation or such holder, such share shall, to the extent of funds
legally available therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed by the Corporation in accordance with
Section 9 hereof, and thereupon such share shall no longer be deemed
outstanding, and neither such holder nor any purported transferee thereof shall
have in respect thereof any of the voting powers, preferences or relative,
participating, optional or special rights ascribed to the share of Class IAM
Preferred Stock hereunder, but rather such holder thereafter shall only be
entitled to receive the amount payable upon redemption in accordance with
Section 9. The certificate representing the share of Class IAM Preferred Stock
shall be legended to reflect the restrictions on transfer and automatic
redemption provided for herein.
Section 2. Definitions. For purposes of the Class IAM Preferred Stock, the
following terms shall have the meanings indicated:
2.1 ''Affiliate'' shall have the meaning defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended, or any successor thereto.
2.2 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee thereof authorized by such board of directors to
perform any of its responsibilities with respect to the Class IAM Preferred
Stock.
2.3 ''Business Day'' shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
2.4 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
2.5 ''Class IAM Preferred Stock'' shall have the meaning set forth in Section
1 hereof.
89
2.6 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.7 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
2.9 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.10 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.11 ''Common Stock'' shall mean the common stock, par value $0.01 per share,
of the Corporation.
2.12 ''Director Preferred Stocks'' shall mean, collectively, the Class I
Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred
Stock and the Class SAM Preferred Stock.
2.13 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class
1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred
Stock, each of the par value of $0.01 per share, of the Corporation.
2.14 ''IAM Fraction'' shall mean 0.3713.
2.15 ''IAM Termination Date'' shall have the meaning set forth in Section 8
hereof.
2.16 ''Issue Date'' shall mean the first date on which shares of Class IAM
Preferred Stock are issued.
2.17 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.18 ''Measuring Date'' shall mean that date which is the 365th day following
the Issue Date.
2.19 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.20 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.21 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.22 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.23 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.24 [Reserved]
90
2.25 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class IAM
Preferred Stock as to distributions upon liquidation, dissolution or winding up
of the Corporation are placed in a separate account of the Corporation or
delivered to a disbursing, paying or other similar agent, then ''set apart for
payment'' with respect to the Class IAM Preferred Stock shall mean, with respect
to such distributions, placing such funds in a separate account or delivering
such funds to a disbursing, paying or other similar agent.
2.26 ''Termination Date'' shall have the meaning set forth in Article FIFTH,
Section 1.72 of this Restated Certificate.
2.27 ''Trading Day'' shall mean any day on which the securities in question
are traded on the New York Stock Exchange, Inc. (the ''NYSE''), or if such
securities are not listed or admitted for trading or quoted on the NYSE, on the
principal national securities exchange on which such securities are listed or
admitted, or if not listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if such securities are
not quoted on such National Market, in the applicable securities market in which
the securities are traded.
2.28 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class IAM Preferred Stock.
2.29 ''Voting Fraction'' shall mean 0.55 with respect to votes or consents
that have a record date on or prior to the Measuring Date, and a fraction that
is equivalent to the Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March 25, 1994, among the
Corporation, the Air Line Pilots Association, International and International
Association of Machinists and Aerospace Workers, as amended from time to time)
as in effect at the close of business on the Measuring Date with respect to
votes and consents that have a record date after the Measuring Date.
2.30 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting
Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends. The holder of the share of Class IAM Preferred Stock
as such shall not be entitled to receive any dividends or other distributions
(except as provided in Section 4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class IAM Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the Corporation, the holder of
the share of Class IAM Preferred Stock shall be entitled to receive $0.01 per
share of Class IAM Preferred Stock (the ''Liquidation Preference''), but such
holder shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable to the holder of the share of Class IAM
Preferred Stock shall be insufficient to pay in full the Liquidation Preference
and the liquidation preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the Class IAM Preferred
Stock as to amounts distributable upon liquidation, dissolution or winding up of
the Corporation, then such assets, or the proceeds thereof, shall be distributed
among the holders of the share of Class IAM Preferred Stock and any such other
parity stock ratably in accordance with the respective amounts that would be
payable on such share of Class IAM Preferred Stock and any such other parity
stock if all amounts payable thereon were paid in full. For the purposes of this
Section 4, (i) a consolidation or merger of the Corporation with or into one or
more corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
91
4.2 Subject to the rights of the holders of shares of any series or class of
stock ranking prior to or on a parity with the Class IAM Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holder of the share of
Class IAM Preferred Stock, as and to the fullest extent provided in this Section
4, any series or class of stock of the Corporation that ranks junior to the
Class IAM Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up of the Corporation, shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holder of the share of
Class IAM Preferred Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. The share of Class IAM Preferred Stock
which shall have been issued and reacquired in any manner (other than redemption
pursuant to Section 9.1) by the Corporation shall be retired and restored to the
status of an authorized but unissued share of Class IAM Preferred Stock and, in
the event of the redemption of such share pursuant to Section 9.1 hereof, shall
not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Class IAM Preferred Stock as to the distribution of assets
upon liquidation, dissolution or winding up, if the holders of such class or
series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the holder
of Class IAM Preferred Stock;
(b) on a parity with the Class IAM Preferred Stock as to the distribution
of assets upon liquidation, dissolution or winding up, whether or not the
liquidation prices per share thereof be different from those of the Class IAM
Preferred Stock, if the holders of such class or series and the Class IAM
Preferred Stock shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in proportion to their respective
liquidation preferences, without preference or priority one over the other;
and
(c) junior to the Class IAM Preferred Stock, as to the distribution of
assets upon liquidation, dissolution or winding up, if the holder of Class IAM
Preferred Stock shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred Stock, the Series D
Preferred Stock and the ESOP Convertible Preferred Stocks shall be deemed to
rank prior to the Class IAM Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up. The other Director Preferred Stocks and
the Voting Preferred Stocks shall each be deemed to rank on a parity with the
Class IAM Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock and the Series C Preferred Stock
shall each be deemed to rank junior to the Class IAM Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation enters into any consolidation, merger, share
exchange or similar transaction, however named, involving the Corporation or its
subsidiary, United Air Lines, Inc. (''United'') (or any successor to all or
substantially all the assets or business of United), pursuant to which the
outstanding shares of Common Stock are to be exchanged for or changed,
reclassified or converted into securities of any successor or resulting or other
company (including the Corporation), or cash or other property (each of the
foregoing transactions is referred to herein as a ''Merger Transaction''),
proper provision shall be made so that, upon consummation of such transaction,
the share of Class IAM Preferred Stock shall be converted, reclassified or
changed into or exchanged for preferred stock of such successor or resulting or
other company having, in respect of such company, the same powers, preferences
and relative, participating, optional or other special rights (including the
rights provided by this Section 7), and the qualifications, limitations or
restrictions thereof, that the Class IAM Preferred Stock had, in respect of
92
the Corporation, immediately prior to such transaction; specifically including,
without limitation, the right, until the IAM Termination Date, to elect one
member of the board of directors (or similar governing body) of such company.
7.2 In case the Corporation shall enter into any agreement providing for any
Merger Transaction, then the Corporation shall as soon as practicable thereafter
(and in any event at least fifteen (15) Business Days before consummation of
such transaction) give notice of such agreement and the material terms thereof
to the holder of the share of Class IAM Preferred Stock. The Corporation shall
not consummate any such Merger Transaction unless all of the terms of this
Section 7 and Section 8 have been complied with.
Section 8. Voting. The holder of the share of Class IAM Preferred Stock
shall have the following voting rights:
8.1 Until the later of (i) the Termination Date and (ii) such time as there
are no longer any persons represented by the IAM (or any successor organization)
employed by the Corporation or any of its Affiliates (the ''IAM Termination
Date''), the holder of the share of Class IAM Preferred Stock shall have the
right (a) voting as a separate class, to elect one Class IAM Director (as
defined in Article FIFTH, Section 2.2 of this Restated Certificate) to the Board
of Directors and (b) voting together as a single class with the holders of
Common Stock and the holders of such other classes or series of stock that vote
together with the Common Stock as a single class, to vote on all matters
submitted to a vote of the holders of Common Stock of the Corporation (other
than the election of Public Directors, as defined in Article FIFTH, Section
2.3), except as otherwise required by law.
8.2 Notwithstanding anything to the contrary in Section 7.1, 7.2 or 8.1, if at
any time prior to the Termination Date, (x) the trustee under either (i) the UAL
Corporation Employee Stock Ownership Plan (the ''ESOP'') or (ii) the UAL
Corporation Supplemental ESOP (together with the ESOP, the ''Plan'') either (a)
fails to solicit, in accordance with the Plan, timely instructions from Plan
participants, the Committee of the ESOP (as defined in the ESOP and hereinafter
referred to as the ''ESOP Committee'') or the Committee of the Supplemental ESOP
(as defined in the Supplemental ESOP and, together with the ESOP Committee, the
''Committees''), as applicable (''Instructions''), with respect to any matter
referred to in clause (y) below, or (b) fails to act in accordance with such
Instructions with respect to any matter referred to in clause (y) below (but
only if such failure to follow such Instructions is attributable to (i) the
trustee having concluded that, based upon the terms of such transaction, the
trustee's fiduciary duties require the trustee to fail to follow such
Instructions or (ii) the unenforceability of the provisions of the ESOP and/or
the Supplemental ESOP relating to the solicitation and/or following of such
Instructions); (y) either (i) but for the provisions of Subsection 8.3(a) and
Article FOURTH, Part VII, Subsection 8.3(a) and Article FOURTH, Part IX,
Subsection 8.3(a) of this Restated Certificate, the vote of the stockholders of
the Corporation would have been sufficient, under applicable law, stock exchange
listing requirements and this Restated Certificate, as applicable, to approve
the Merger Transaction or other Control Transaction (as defined in the ESOP) in
question (or, if no stockholder approval would be required by this Restated
Certificate, applicable stock exchange listing requirements or applicable law,
the trustee enters into a binding commitment in connection with a Control
Transaction or a Control Transaction is consummated) or (ii) following the Issue
Date, the trustee disposes of an aggregate of 10% or more of the Common Equity
(as defined in Article FIFTH, Section 1.26 of this Restated Certificate)
initially represented by the ESOP Convertible Preferred Stocks other than in
connection with Plan distributions; and (z) any of the following occur: (a)
Instructions with respect to a matter are given, the trustee fails to follow
such Instructions and such transaction would not have been approved by
stockholders of the Corporation in accordance with the applicable provisions of
this Restated Certificate (excluding Subsection 8.3(a) and Article FOURTH, Part
VII, Subsection 8.3(a) and Article FOURTH, Part IX, Subsection 8.3(a) of this
Restated Certificate), applicable stock exchange listing requirements or
applicable law if the trustee had acted in accordance with such Instructions
(or, if no vote of stockholders would be required by this Restated Certificate,
applicable stock exchange listing requirements or applicable law, such action by
the trustee in respect of such transaction as to which Instructions were so
given would not have been authorized had the trustee acted in accordance with
such Instructions), (b) the trustee fails to solicit timely Instructions with
respect to such matters, such transaction requires the approval of stockholders
of the Corporation under applicable provisions of this Restated Certificate,
applicable stock exchange listing requirements or applicable law and such
approval would not have been obtained (without regard to Subsection 8.3(a) and
Article FOURTH, Part VII, Subsection 8.3(a) and Article FOURTH, Part IX,
Subsection 8.3(a) of this Restated Certificate) if the trustee had voted against
such transaction all of the votes entitled to be cast
93
by such trustee as the holder of securities of the Corporation held under the
Plan, or (c) the trustee fails to follow Instructions or to solicit timely
Instructions with respect to such matter and no vote of stockholders of the
Corporation is required by the Restated Certificate, applicable stock exchange
listing requirements or applicable law to approve such transaction (an action or
inaction by the trustee under clauses (x) and (z) in connection with a
transaction referred to in clause (y) being referred to herein as an
''Uninstructed Trustee Action''); then, (I) the Merger Transaction or other
Control Transaction referred to in clause (y)(i) of Section 8.2 involving an
Uninstructed Trustee Action, if it requires stockholder approval under
applicable law, stock exchange listing requirements or this Restated
Certificate, must also be approved by the vote of stockholders described in
Subsection 8.3(a), and (II) from and after such Uninstructed Trustee Action, in
addition to the voting rights provided for under Section 8.1, the share of Class
IAM Preferred Stock shall have the voting rights set forth in Subsection 8.3(b).
8.3 (a) In addition to any other vote or consent of stockholders required by
this Restated Certificate, applicable stock exchange listing requirements or
applicable law, any Merger Transaction or other Control Transaction referred to
in clause (y)(i) of Section 8.2 involving an Uninstructed Trustee Action that
requires stockholder approval under applicable law, stock exchange listing
requirements or this Restated Certificate must also be approved by at least a
majority of the votes entitled to be cast in respect of all outstanding shares
of the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock, the Class
SAM Preferred Stock, the Common Stock and such other classes and series of stock
that vote together with the Common Stock as a single class (other than the
Voting Preferred Stocks), with all such shares voting, for purposes of this
paragraph, as a single class, and for purposes of such vote the Class IAM
Preferred Stock shall be entitled to cast a number of votes calculated in
accordance with Subsection 8.3(c).
(b) Except as otherwise required by law or provided in this Restated
Certificate, from and after an Uninstructed Trustee Action, the holder of the
share of Class IAM Preferred Stock shall be entitled to vote on all matters
submitted to a vote of the holders of Common Stock, voting together as a single
class with the holders of Class Pilot MEC Preferred Stock, the holders of Class
SAM Preferred Stock, the holders of Common Stock and the holders of such other
classes and series of stock that vote together with the Common Stock as a single
class (other than the Voting Preferred Stocks) and for purposes of such vote the
Class IAM Preferred Stock shall be entitled to cast a number of votes calculated
in accordance with Subsection 8.3(c); provided, however, that, except as
provided in Section 8.1, prior to the Termination Date, the holder of the share
of Class IAM Preferred Stock shall not be entitled to vote with the holders of
Common Stock with respect to the election of the members of the Board of
Directors.
(c) With respect to any vote or consent (i) with respect to which the Class
IAM Preferred Stock is entitled to vote pursuant to Subsection 8.3(a) or (ii)
with respect to which the Class IAM Preferred Stock is entitled to vote pursuant
to Subsection 8.3(b) and the record date for which occurs after an Uninstructed
Trustee Action and prior to the Termination Date, the holder of the share of
Class IAM Preferred Stock shall be entitled to a number of votes (rounded to the
nearest whole vote) equal to the product of (I) the IAM Fraction, (II) the
Voting Fraction and (III) a fraction, the numerator of which shall be the number
of votes entitled to be cast on the matter by the holders of all outstanding
securities of the Corporation (excluding the Class Pilot MEC Preferred Stock and
the Class SAM Preferred Stock), and the denominator of which shall be the excess
of one (1.0) over the Voting Fraction (the ''Attributed Vote''). If, with
respect to any matter as to which the immediately preceding sentence shall
apply, (i) shares of Common Stock are held under the ESOP or the Supplemental
ESOP which have been issued upon conversion of the ESOP Convertible Preferred
Stocks (''Subject Shares''), (ii) with respect to any action as to which the
trustee is required, in accordance with the terms of the ESOP or the
Supplemental ESOP, to solicit Instructions, the trustee has solicited such
Instructions and (iii) the trustee has voted some or all of the Subject Shares
in accordance with such Instructions (the shares which the trustee has voted in
accordance with such Instructions, ''Instructed Trustee Common Shares''), then
the Attributed Votes shall be reduced by the Pro Rata Reduction. The ''Pro Rata
Reduction'' shall equal, with respect to any such matter, the sum of (I) the
product of (x) a fraction, the numerator of which is the number of votes
represented by Subject Shares as to which members of the IAM Employee Group (or
the Committees) gave Instructions to the trustee to vote in favor of the matter,
and the denominator of which is the number of votes represented by Subject
Shares as to which members of all Employee Groups (as defined in the ESOP) (or
the Committees) gave Instructions to the trustee to vote in favor of the matter
(such denominator being referred to as the ''Instructed Pro Vote'') and (y) the
number of votes represented by Subject Shares that the trustee actually voted in
favor of the matter (but in no event more than the Instructed Pro
94
Vote); and (II) the product of (x) a fraction, the numerator of which is the
number of votes represented by Subject Shares as to which members of the IAM
Employee Group (or the Committees) gave instructions to the trustee to vote
against the matter, and the denominator of which is the number of votes
represented by Subject Shares as to which members of all Employee Groups (or the
Committees) gave Instructions to the trustee to vote against the matter (such
denominator being referred to as the ''Instructed Con Vote'') and (y) the number
of votes represented by Subject Shares that the trustee actually voted against
the matter (but in no event more than the Instructed Con Vote).
For purposes of this Section 8.3, the Corporation shall certify to the holders
of Class IAM Preferred Stock and to the judges or similar officials appointed
for the purpose of tabulating votes at any meeting of stockholders as soon as
practicable following the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of stockholders, but in no event
less than five Trading Days before such meeting, the number of shares of Common
Stock then outstanding and the number of votes entitled to be cast on the matter
or matters in question by the holders of all outstanding securities of the
Corporation (excluding the Class Pilot MEC Preferred Stock and the Class SAM
Preferred Stock). The Corporation shall be deemed to satisfy the requirements of
the preceding sentence if such matters are specified in any proxy statement
mailed to all stockholders entitled to vote on such matter or matters. With
respect to any vote or consent as to which the first sentence of this Subsection
8.3(c) applies, the outstanding share of Class IAM Preferred Stock, together
with the outstanding shares of the Class Pilot MEC Preferred Stock and the
outstanding shares of Class SAM Preferred Stock, will represent the Voting
Fraction (expressed as a percentage) of the votes to be cast in connection with
matters (other than the election of directors) submitted to the vote of the
holders of the Common Stock and the holders of all other outstanding securities
that vote as a single class together with the Common Stock. Subject to any
amendment of this Restated Certificate after the date hereof, it is the intent
of this Restated Certificate that this Section 8.3 (with respect to the Class
IAM Preferred Stock), Article FOURTH, Part VII, Section 8.3 of the Restated
Certificate (with respect to the Class Pilot MEC Preferred Stock), and Article
FOURTH, Part IX, Section 8.3 of the Restated Certificate (with respect to the
Class SAM Preferred Stock), be interpreted together to achieve the foregoing
result. With respect to any vote or consent as to which the first sentence of
this Section 8.3(c) does not apply, the Class IAM Preferred Stock shall not have
any voting rights except as provided by Sections 8.1, 8.2 and 8.4 and applicable
law provided, however, that if the Termination Date occurs directly or
indirectly as a result of an Uninstructed Trustee Action then, notwithstanding
anything to the contrary contained herein, the voting rights of the Class IAM
Preferred Stock set forth in this Section 8.3 shall continue until the
anniversary of the Issue Date occurring in the year 2010. For purposes of the
proviso in the immediately preceding sentence, the Termination Date shall be
deemed to have occurred as a result of an Uninstructed Trustee Action if the
Termination Date occurs within one year of such Uninstructed Trustee Action.
8.4 The affirmative vote or written consent of the holder of the share of
Class IAM Preferred Stock, voting separately as a class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal
(including any amendment, alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated Certificate or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designation, Preferences and Rights or any similar document
relating to any series of Serial Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of the Class IAM Preferred Stock.
8.5 For purposes of the foregoing provisions of Sections 8.1 and 8.4, each
share of Class IAM Preferred Stock shall have one (1) vote per share.
Section 9. Redemption.
9.1 The share of Class IAM Preferred Stock shall, to the extent of funds
legally available therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed on the IAM Termination Date, at a price
of $0.01 per share of Class IAM Preferred Stock, as provided hereinbelow. As
promptly as reasonably possible following the occurrence of the IAM Termination
Date, the Corporation shall give notice thereof and of the redemption under this
Section 9 to the record holder of the Class IAM Preferred Stock. From and after
the redemption provided for in this Section 9.1, all rights of the holder of the
Class IAM Preferred Stock as such, except the right to receive the redemption
price of such shares upon the surrender of the certificate formerly representing
95
the same, shall cease and terminate and such share shall not thereafter be
deemed to be outstanding for any purpose whatsoever.
9.2 The share of Class IAM Preferred Stock shall, to the extent of funds
legally available therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed upon any purported transfer thereof other
than as expressly permitted under Section 1.2. The redemption price to be paid
in connection with any redemption shall be $0.01 per share of Class IAM
Preferred Stock. Upon any such redemption, all rights of the holder of Class IAM
Preferred Stock as such, except the right to receive the redemption price of
such share upon the surrender of the certificate formerly representing the same,
shall cease and terminate and such share shall not thereafter be deemed to be
outstanding for any purpose whatsoever.
9.3 The holder of the share of Class IAM Preferred Stock so redeemed pursuant
to Section 9.1 or 9.2 shall present and surrender his certificate formerly
representing such share to the Corporation and thereupon the redemption price of
such share shall be paid to or on the order of the person whose name appears on
such certificate as the owner thereof and the surrendered certificate shall be
cancelled.
Section 10. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of the share of
Class IAM Preferred Stock as the true and lawful owner thereof for all purposes,
and, except as otherwise provided by law, neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
PART IX
Class SAM Junior Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part IX, to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part IX.
Section 1. Number of Shares; Designation; Issuance; Restrictions on
Transfer.
1.1 The Class SAM Junior Preferred Stock of the Corporation (the ''Class SAM
Preferred Stock'') shall consist of ten shares, par value $0.01 per share.
1.2 Shares of Class SAM Preferred Stock shall be issued only to the persons
who are designated, pursuant to Section 8 of the Class SAM Preferred Stock
Stockholders' Agreement, to be the nominee for election pursuant to Article
FIFTH, Section 2.2 of this Restated Certificate as the Salaried/Management
Employee Director (the ''Salaried/Management Director'') or as a Designated
Stockholder (as defined in the Class SAM Stockholders' Agreement, the
''Designated Stockholder''). Any purported sale, transfer, pledge (other than a
pledge made in accordance with the Class SAM Stockholders' Agreement) or other
disposition (hereinafter a ''transfer'') of shares of Class SAM Preferred Stock
by a holder thereof other than to (x) any person to whom shares of Class SAM
Preferred Stock may be issued in accordance with the immediately prior sentence,
(y) another person designated pursuant to Section 8 of the Class SAM
Stockholders' Agreement or (z) in the case where no successor Salaried/
Management Director (the ''Successor Salaried/Management Director'') has been
elected concurrently with the Salaried/Management Director's removal,
resignation, failure to remain qualified, failure to be re-elected or otherwise
ceasing to serve as Salaried/Management Director, to the Corporation (to be held
in escrow pending transfer to the Successor Salaried/Management Director when
such successor is duly elected) shall be null and void and of no force and
effect. Upon any purported transfer other than as expressly permitted above, and
without any further action by the Corporation or such holder, such share of
Class SAM Preferred Stock so purported to be transferred shall, to the extent of
funds legally available therefor and subject to the other provisions of this
Restated Certificate, be automatically redeemed by the Corporation in accordance
with Section 9 hereof, and thereupon such share shall no longer be deemed
outstanding and neither such holder nor any purported transferee thereof shall
have in respect thereof any of the voting powers, preferences or relative,
participating, optional or special rights ascribed
96
to the shares of Class SAM Preferred Stock hereunder, but rather such holder
thereafter shall only be entitled to receive the amount payable upon redemption
in accordance with Section 9. Certificates representing the shares of Class SAM
Preferred Stock shall be legended to reflect the restrictions on transfer and
automatic redemption provided for herein.
Section 2. Definitions. For purposes of the Class SAM Preferred Stock, the
following terms shall have the meanings indicated:
2.1 ''ALPA Termination Date'' shall have the meaning set forth in Article
FOURTH, Part VII, Section 8.1 of this Restated Certificate.
2.2 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee thereof authorized by such board of directors to
perform any of its responsibilities with respect to the Class SAM Preferred
Stock.
2.3 ''Business Day'' shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
2.4 ''Class I Preferred Stock'' shall mean the Class I Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
2.5 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.6 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.7 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
2.9 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.10 ''Class SAM Preferred Stock'' shall have the meaning set forth in Section
1 hereof.
2.11 ''Class SAM Stockholders' Agreement'' shall mean the Class SAM Preferred
Stockholders' Agreement dated as of July 12, 1994 among the Corporation and the
individuals named therein, a copy of which is on file at the office of the
Secretary of the Corporation.
2.12 ''Common Stock'' shall mean the common stock of the Corporation, par
value $0.01 per share.
2.13 ''Director Preferred Stocks'' shall mean collectively, the Class I
Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred
Stock and the Class SAM Preferred Stock.
2.14 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class
1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred
Stock, each of the par value of $0.01 per share, of the Corporation.
2.15 ''IAM Termination Date'' shall have the meaning set forth in Article
FOURTH, Part VIII, Section 8.1 of this Restated Certificate.
97
2.16 ''Issue Date'' shall mean the first date on which shares of Class SAM
Preferred Stock are issued.
2.17 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.18 ''Measuring Date'' shall mean that date which is the 365th day following
the Issue Date.
2.19 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.20 ''Salaried/Management Employee Director'' shall have the meaning set
forth in Section 1.2 hereof.
2.21 ''SAM Fraction'' shall mean 0.1664.
2.22 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.23 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.24 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.25 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.26 [Reserved]
2.27 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class SAM
Preferred Stock as to distributions upon liquidation, dissolution or winding up
of the Corporation are placed in a separate account of the Corporation or
delivered to a disbursing, paying or other similar agent, then ''set apart for
payment'' with respect to the Class SAM Preferred Stock shall mean, with respect
to such distributions, placing such funds in a separate account or delivering
such funds to a disbursing, paying or other similar agent.
2.28 ''Termination Date'' shall have the meaning set forth in Article FIFTH,
Section 1.72 of this Restated Certificate.
2.29 ''Trading Day'' shall mean any day on which the securities in question
are traded on the New York Stock Exchange, Inc. (the ''NYSE''), or if such
securities are not listed or admitted for trading or quoted on the NYSE, on the
principal national securities exchange on which such securities are listed or
admitted, or if not listed or admitted for trading or quoted on any national
securities exchange, on the Nasdaq National Market, or if such securities are
not quoted on such National Market, in the applicable securities market in which
the securities are traded.
2.30 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class SAM Preferred Stock.
2.31 ''Voting Fraction'' shall mean 0.55 with respect to votes or consents
that have a record date on or prior to the Measuring Date, and a fraction that
is equivalent to the Adjusted Percentage (as defined in Section 1.10 of the
Agreement and Plan of Recapitalization, dated as of March 25, 1994, among the
Corporation, the Air Line Pilots Association, International and International
Association of Machinists and Aerospace Workers, as amended from
98
time to time) as in effect at the close of business on the Measuring Date with
respect to votes and consents that have a record date after the Measuring Date.
2.32 ''Voting Preferred Stocks'' shall mean, collectively, the Class P Voting
Preferred Stock, the Class M Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends. The holders of shares of the Class SAM Preferred
Stock as such shall not be entitled to receive any dividends or other
distributions (except as provided in Section 4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class SAM Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the Corporation, the holders of
the shares of Class SAM Preferred Stock shall be entitled to receive $0.01 per
share of Class SAM Preferred Stock (the ''Liquidation Preference''), but such
holders shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable to the holders of the shares of Class SAM
Preferred Stock shall be insufficient to pay in full the Liquidation Preference
and the liquidation preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the Class SAM Preferred
Stock as to amounts distributable upon liquidation, dissolution or winding up of
the Corporation, then such assets, or the proceeds thereof, shall be distributed
among the holders of shares of Class SAM Preferred Stock and any such other
parity stock ratably in accordance with the respective amounts that would be
payable on such shares of Class SAM Preferred Stock and any such other parity
stock if all amounts payable thereon were paid in full. For the purposes of this
Section 4, (i) a consolidation or merger of the Corporation with or into one or
more corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class of
stock ranking prior to or on a parity with the Class SAM Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holders of the Class SAM
Preferred Stock, as and to the fullest extent provided in this Section 4, any
series or other class of stock of the Corporation that ranks junior to the Class
SAM Preferred Stock as to amounts distributable upon liquidation, dissolution or
winding up of the Corpora tion, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Class SAM Preferred
Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. All shares of Class SAM Preferred Stock
which shall have been issued and reacquired in any manner (other than redemption
pursuant to Section 9.1) by the Corporation, other than in its capacity as
escrow agent in accordance with Section 1.2 hereof, shall be retired and
restored to the status of authorized but unissued shares of Class SAM Preferred
Stock and, in the event of redemption of such shares pursuant to Section 9.1
hereof, shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to the Class SAM Preferred Stock as to the distribution of assets
upon liquidation, dissolution or winding up, if the holders of such class or
series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of Class SAM Preferred Stock;
(b) on a parity with the Class SAM Preferred Stock as to the distribution
of assets upon liquidation, dissolution or winding up, whether or not the
liquidation prices per share thereof be different from those of the
99
Class SAM Preferred Stock, if the holders of such class or series and the
Class SAM Preferred Stock shall be entitled to the receipt of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective liquidation preferences, without preference or priority one
over the other; and
(c) junior to the Class SAM Preferred Stock, as to the distribution of
assets upon liquidation, dissolution or winding up, if the holders of Class
SAM Preferred Stock shall be entitled to the receipt of amounts distributable
upon liquidation, dissolution or winding up in preference or priority to the
holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred Stock, the Series D
Preferred Stock and the ESOP Convertible Preferred Stocks shall each be deemed
to rank prior to the Class SAM Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up. The other Director Preferred Stocks and
the Voting Preferred Stocks shall each be deemed to rank on a parity with the
Class SAM Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock and the Series C Preferred Stock
shall each be deemed to rank junior to the Class SAM Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
7.1 In case the Corporation enters into any consolidation, merger, share
exchange or similar transaction, however named, involving the Corporation or its
subsidiary, United Air Lines, Inc. (''United'') (or any successor to all or
substantially all the assets or business of United), pursuant to which the
outstanding shares of Common Stock are to be exchanged for or changed,
reclassified or converted into securities of any successor or resulting or other
company (including the Corporation), or cash or other property (each of the
foregoing transactions is referred to herein as a ''Merger Transaction''),
proper provision shall be made so that, upon consummation of such transaction,
the shares of Class SAM Preferred Stock shall be converted, reclassified or
changed into or exchanged for preferred stock of such successor or resulting or
other company having, in respect of such company, the same powers, preferences
and relative, participating, optional or other special rights (including the
rights provided by this Section 7), and the qualifications, limitations or
restrictions thereof, that the Class SAM Preferred Stock had, in respect of the
Corporation, immediately prior to such transaction; specifically including,
without limitation, the right, until the Class SAM Preferred Stock Termination
Date (as defined in Section 9.1), to elect one member of the board of directors
(or similar governing body) of such company.
7.2 In case the Corporation shall enter into any agreement providing for any
Merger Transaction, then the Corporation shall as soon as practicable thereafter
(and in any event at least fifteen (15) Business Days before consummation of
such transaction) give notice of such agreement and the material terms thereof
to the holders of the shares of Class SAM Preferred Stock. The Corporation shall
not consummate any such Merger Transaction unless all of the terms of this
Section 7 and Section 8 have been complied with.
Section 8. Voting. The holders of shares of Class SAM Preferred Stock
shall have the following voting rights; provided, however, that no holder of
shares of Class SAM Preferred Stock shall have any right to vote unless at such
time such person is the Salaried/Management Director or the Designated
Stockholder under the Class SAM Stockholders' Agreement:
8.1 Until the Class SAM Preferred Stock Termination Date, the holders of the
Class SAM Preferred Stock shall have the right (i) voting separately as a class,
to elect one Salaried/Management Employee Director to the Board of Directors and
(ii) voting together as a single class with the holders of Common Stock and the
holders of such other classes or series of stock that vote together with the
Common Stock as a single class, to vote on all matters submitted to a vote of
the holders of Common Stock of the Corporation (other than the election of
Public Directors, as defined in Article FIFTH, Section 2.3), except as otherwise
required by law.
8.2 Notwithstanding anything to the contrary in Section 7.1, 7.2 or 8.1, if at
any time prior to the Termination Date, (x) the trustee under either (i) the UAL
Corporation Employee Stock Ownership Plan (the ''ESOP'') or (ii) the UAL
Corporation Supplemental ESOP (together with the ESOP, the ''Plan'') either (a)
fails to solicit, in accordance
100
with the Plan, timely instructions from Plan participants, the Committee of the
ESOP (as defined in the ESOP and hereinafter referred to as the ''ESOP
Committee'') or the Committee of the Supplemental ESOP (as defined in the
Supplemental ESOP and, together with the ESOP Committee, the ''Committees''), as
applicable (''Instructions''), with respect to any matter referred to in clause
(y) below, or (b) fails to act in accordance with such Instructions with respect
to any matter referred to in clause (y) below (but only if such failure to
follow such Instructions is attributable to (i) the trustee having concluded
that, based upon the terms of such transaction, the trustee's fiduciary duties
require the trustee to fail to follow such Instructions or (ii) the
unenforceability of the provisions of the ESOP and/or the Supplemental ESOP
relating to the solicitation and/or following of such Instructions); (y) either
(i) but for the provisions of Subsection 8.3(a) and Article FOURTH, Part VII,
Subsection 8.3(a) and Article FOURTH, Part VIII, Subsection 8.3(a) of this
Restated Certificate, the vote of the stockholders of the Corporation would have
been sufficient, under applicable law, stock exchange listing requirements and
this Restated Certificate, as applicable, to approve the Merger Transaction or
other Control Transaction (as defined in the ESOP) in question (or, if no
stockholder approval would be required by this Restated Certificate, applicable
stock exchange listing requirements or applicable law, the trustee enters into a
binding commitment in connection with a Control Transaction or a Control
Transaction is consummated) or (ii) following the Issue Date, the trustee
disposes of an aggregate of 10% or more of the Common Equity (as defined in
Article FIFTH, Section 1.26 of this Related Certificate) initially represented
by the ESOP Convertible Preferred Stocks other than in connection with Plan
distributions; and (z) any of the following occur: (a) Instructions with respect
to a matter are given, the trustee fails to follow such Instructions and such
transaction would not have been approved by stockholders of the Corporation in
accordance with the applicable provisions of this Restated Certificate
(excluding Subsection 8.3(a) and Article FOURTH, Part VII, Subsection 8.3(a) and
Article FOURTH, Part VIII, subsection 8.3(a) of this Restated Certificate),
applicable stock exchange listing requirements or applicable law if the trustee
had acted in accordance with such Instructions (or, if no vote of stockholders
would be required by this Restated Certificate, applicable stock exchange
listing requirements or applicable law, such action by the trustee in respect of
such transaction as to which Instructions were so given would not have been
authorized had the trustee acted in accordance with such Instructions), (b) the
trustee fails to solicit timely Instructions with respect to such matters, such
transaction requires the approval of stockholders of the Corporation under
applicable provisions of this Restated Certificate, applicable stock exchange
listing requirements or applicable law and such approval would not have been
obtained (without regard to Subsection 8.3(a) and Article FOURTH, Part VII,
Subsection 8.3(a) and Article FOURTH, Part VIII, Subsection 8.3(a) of this
Restated Certificate) if the trustee had voted against such transaction all of
the votes entitled to be cast by such trustee as the holder of securities of the
Corporation held under the Plan, or (c) the trustee fails to follow Instructions
or to solicit timely Instructions with respect to such matter and no vote of
stockholders of the Corporation is required by the Restated Certificate,
applicable stock exchange listing requirements or applicable law to approve such
transaction (an action or inaction by the trustee under clauses (x) and (z) in
connection with a transaction referred to in clause (y) being referred to herein
as an ''Uninstructed Trustee Action''); then, (I) the Merger Transaction or
other Control Transaction referred to in clause (y)(i) of Section 8.2 involving
an Uninstructed Trustee Action, if it requires stockholder approval under
applicable law, stock exchange listing requirements or this Restated
Certificate, must also be approved by the vote of stockholders described in
Subsection 8.3(a), and (II) from and after such Uninstructed Trustee Action, in
addition to the voting rights provided for under Section 8.1, the share of Class
SAM Preferred Stock shall have the voting rights set forth in Subsection 8.3(b).
8.3 (a) In addition to any other vote or consent of stockholders required by
this Restated Certificate, applicable stock exchange listing requirements or
applicable law, any Merger Transaction or other Control Transaction referred to
in clause (y)(i) of Section 8.2 involving an Uninstructed Trustee Action that
requires stockholder approval under applicable law, stock exchange listing
requirements or this Restated Certificate must also be approved by at least a
majority of the votes entitled to be cast in respect of all outstanding shares
of the Class Pilot MEC Preferred Stock, the Class IAM Preferred Stock, the Class
SAM Preferred Stock, the Common Stock and such other classes and series of stock
that vote together with the Common Stock as a single class (other than the
Voting Preferred Stocks), with all such shares voting, for purposes of this
paragraph, as a single class, and for purposes of such vote the Class SAM
Preferred Stock shall be entitled to cast a number of votes calculated in
accordance with Subsection 8.3(c).
(b) Except as otherwise required by law or provided in this Restated
Certificate, from and after an Uninstructed Trustee Action, holders of shares of
Class SAM Preferred Stock shall be entitled to vote on all matters submitted to
101
a vote of the holders of Common Stock, voting together as a single class with
the holders of Class IAM Preferred Stock, the holders of Class Pilot MEC
Preferred Stock, the holders of Common Stock and the holders of such other
classes and series of stock that vote together with the Common Stock as a single
class (other than the Voting Preferred Stocks) and for purposes of such vote the
Class SAM Preferred Stock shall be entitled to cast a number of votes calculated
in accordance with Subsection 8.3(c); provided, however, that, except as
provided in Section 8.1, prior to the Termination Date, holders of shares of
Class SAM Preferred Stock shall not be entitled to vote with the holders of
Common Stock with respect to the election of the members of the Board of
Directors.
(c) With respect to any vote or consent (i) with respect to which the Class
SAM Preferred Stock is entitled to vote pursuant to Subsection 8.3(a) or (ii)
with respect to which the Class SAM Preferred Stock is entitled to vote pursuant
to Subsection 8.3(b) and the record date for which occurs after an Uninstructed
Trustee Action and prior to the Termination Date, (x) holders of shares of Class
SAM Preferred Stock shall, collectively, be entitled to a number of votes
(rounded to the nearest whole vote) equal to the product of (I) the SAM
Fraction, (II) the Voting Fraction and (III) a fraction, the numerator of which
shall be the number of votes entitled to be cast on the matter by the holders of
all outstanding securities of the Corporation (excluding the Class IAM Preferred
Stock and the Class Pilot MEC Preferred Stock), and the denominator of which
shall be the excess of one (1.0) over the Voting Fraction (the ''Aggregate SAM
Vote''), and (y) the holder of each share of the Class SAM Preferred Stock shall
be entitled to a number of votes per share equal to the result of dividing (aa)
the number of Aggregate SAM Votes by (bb) the number of shares of Class SAM
Preferred Stock outstanding on the applicable record date. If, with respect to
any matter as to which the immediately preceding sentence shall apply, (i)
shares of Common Stock are held under the ESOP or the Supplemental ESOP which
have been issued upon conversion of the ESOP Convertible Preferred Stocks
(''Subject Shares''), (ii) with respect to any action as to which the trustee is
required, in accordance with the terms of the ESOP or the Supplemental ESOP, to
solicit Instructions, the trustee has solicited such Instructions and (iii) the
trustee has voted some or all of the Subject Shares in accordance with such
Instructions (the shares which the trustee has voted in accordance with such
Instructions, ''Instructed Trustee Common Shares''), then the Attributed Votes
shall be reduced by the Pro Rata Reduction. The ''Pro Rata Reduction'' shall
equal, with respect to any such matter, the sum of (I) the product of (x) a
fraction, the numerator of which is the number of votes represented by Subject
Shares as to which members of the Management and Salaried Employee Group (or the
Committees) gave Instructions to the trustee to vote in favor of the matter, and
the denominator of which is the number of votes represented by Subject Shares as
to which members of all Employee Groups (as defined in the ESOP) (or the
Committees) gave Instructions to the trustee to vote in favor of the matter
(such denominator being referred to as the ''Instructed Pro Vote'') and (y) the
number of votes represented by Subject Shares that the trustee actually voted in
favor of the matter (but in no event more than the Instructed Pro Vote); and
(II) the product of (x) a fraction, the numerator of which is the number of
votes represented by Subject Shares as to which members of the Management and
Salaried Employee Group (or the Committees) gave instructions to the trustee to
vote against the matter, and the denominator of which is the number of votes
represented by Subject Shares as to which members of all Employee Groups (or the
Committees) gave Instructions to the trustee to vote against the matter (such
denominator being referred to as the ''Instructed Con Vote'') and (y) the number
of votes represented by Subject Shares that the trustee actually voted against
the matter (but in no event more than the Instructed Con Vote).
For purposes of this Section 8.3, the Corporation shall certify to the holders
of Class SAM Preferred Stock and to the judges or similar officials appointed
for the purpose of tabulating votes at any meeting of stockholders as soon as
practicable following the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of stockholders, but in no event
less than five Trading Days before such meeting, the number of shares of Common
Stock then outstanding and the number of votes entitled to be cast on the matter
or matters in question by the holders of all outstanding securities of the
Corporation (excluding the Class IAM Preferred Stock and the Class Pilot MEC
Preferred Stock). The Corporation shall be deemed to satisfy the requirements of
the preceding sentence if such matters are specified in any proxy statement
mailed to all stockholders entitled to vote on such matter or matters. With
respect to any vote or consent as to which the first sentence of this Subsection
8.3(c) applies, the outstanding share of Class SAM Preferred Stock, together
with the outstanding shares of the Class IAM Preferred Stock and the outstanding
shares of Class Pilot MEC Preferred Stock, will represent the Voting Fraction
(expressed as a percentage) of the votes to be cast in connection with matters
(other than the election of directors) submitted to the vote of the holders of
the Common Stock and the holders of all other outstanding securities that vote
as a single class together with the Common Stock. Subject to any amendment of
this Restated Certificate after
102
the date hereof, it is the intent of this Restated Certificate that this Section
8.3 (with respect to the Class SAM Preferred Stock), Article FOURTH, Part VIII,
Section 8.3 of the Restated Certificate (with respect to the Class IAM Preferred
Stock), and Article FOURTH, Part VII, Section 8.3 of the Restated Certificate
(with respect to the Class Pilot MEC Preferred Stock), be interpreted together
to achieve the foregoing result. With respect to any vote or consent as to which
the first sentence of this Section 8.3(c) does not apply, the Class SAM
Preferred Stock shall not have any voting rights except as provided by Sections
8.1, 8.2 and 8.4 and applicable law; provided, however, that if the Termination
Date occurs directly or indirectly as a result of an Uninstructed Trustee Action
then, notwithstanding anything to the contrary contained herein, the voting
rights of the Class SAM Preferred Stock set forth in this Section 8.3 shall
continue until the anniversary of the Issue Date occurring in the year 2010. For
purposes of the proviso in the immediately preceding sentence, the Termination
Date shall be deemed to have occurred as a result of an Uninstructed Trustee
Action if the Termination Date occurs within one year of such Uninstructed
Trustee Action.
8.4 The affirmative vote or written consent of the holders of a majority of
the outstanding shares of Class SAM Preferred Stock, voting separately as a
class, shall be necessary for authorizing, effecting or validating the
amendment, alteration or repeal (including any amendment, alteration or repeal
by operation of merger or consolidation) of any of the provisions of this
Restated Certificate or of any certificate amendatory thereof or supplemental
thereto (including any Certificate of Designation, Preferences and Rights or any
similar document relating to any series of Serial Preferred Stock) which would
adversely affect the preferences, rights, powers or privileges of the Class SAM
Preferred Stock.
8.5 For purposes of the foregoing provisions of Sections 8.1 and 8.4, each
share of Class SAM Preferred Stock shall have one (1) vote per share.
Section 9. Redemption.
9.1 All outstanding shares of Class SAM Preferred Stock shall, to the extent
of funds legally available therefor and subject to the other provisions of this
Restated Certificate, be automatically redeemed on the earlier of the ALPA
Termination Date and the IAM Termination Date (the ''Class SAM Preferred Stock
Termination Date''), at a price of $0.01 per share of Class SAM Preferred Stock,
as provided below. As promptly as reasonably possible following the occurrence
of the Class SAM Preferred Stock Termination Date, the Corporation shall give
notice thereof and of the redemption under this Section 9 to all record holders
of the Class SAM Preferred Stock. From and after the redemption provided for in
this Section 9.1, all rights of the holder of Class SAM Preferred Stock as such,
except the right to receive the redemption price of such shares upon the
surrender of certificates formerly representing the same, shall cease and
terminate and such shares shall not thereafter be deemed to be outstanding for
any purpose whatsoever.
9.2 The shares of Class SAM Preferred Stock shall, to the extent of funds
legally available therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed from time to time, in part, concurrently
with any purported transfer of shares of Class SAM Preferred Stock other than as
expressly permitted under Section 1.2, and the number of shares so redeemed
shall be equal to the number of shares purported to be transferred. The
redemption price to be paid in connection with any redemption shall be $0.01 per
share of Class SAM Preferred Stock. From and after the redemption provided for
in this Section 9.2, all rights of the holders of the shares of Class SAM
Preferred Stock so redeemed, except the right to receive the redemption price of
such shares upon the surrender of certificates formerly representing the same,
shall cease and terminate and such shares shall not thereafter be deemed to be
outstanding for any purpose whatsoever.
9.3 Upon any such redemption provided for in Section 9.1 or 9.2 above, each
holder of a certificate formerly representing the shares of Class SAM Preferred
Stock so redeemed shall present and surrender such certificate to the
Corporation and thereupon the redemption price of such shares shall be paid to
or on the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled.
103
Section 10. Record Holders. The Corporation and the Transfer Agent (if
other than the Corporation) may deem and treat the record holder of any shares
of Class SAM Preferred Stock as the true and lawful owner thereof for all
purposes, and, except as otherwise provided by law, neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
PART X
Class I Junior Preferred Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part X, to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part X.
Section 1. Number of Shares; Designations; Issuance; Restrictions on
Transfer.
1.1 The Class I Junior Preferred Stock of the Corporation (the ''Class I
Preferred Stock'') shall consist of ten shares, par value $0.01 per share.
1.2 Each share of Class I Preferred Stock shall be issued only to a person who
serves as an Independent Director of the Corporation meeting the requirements
set forth in Article FIFTH, Section 2.4 of this Restated Certificate or to the
initial ''Individual Parties'' under the Class I Stockholders' Agreement (as
such term is defined in Article FIFTH, Section 1.15 of this Restated
Certificate) (the ''Class I Stockholders' Agreement'') (each such person, an
''Independent Director'') and may be held by such person only so long as such
person shall continue to serve as an Independent Director. Any purported sale,
transfer, pledge (other than a pledge made in accordance with the Class I
Stockholders' Agreement), or other disposition (hereinafter a ''transfer'') of
shares of Class I Preferred Stock by a holder thereof to any person other than
to (x) such holder's successor as an Independent Director (any such individual,
a ''Successor Independent Director'') or (y) in the case where no such Successor
Independent Director has been elected concurrently with such holder's removal,
resignation, failure to remain qualified, failure to be re-elected or otherwise
ceasing to serve as an Independent Director, to any Independent Director then in
office, or if there are no Independent Directors then in office, to the
Corporation (to be held in escrow by such Independent Director or the
Corporation, as the case may be, pending transfer to such holder's Successor
Independent Director when such successor is duly elected) shall be null and void
and of no force and effect. Upon any purported transfer of a share of Class I
Preferred Stock by the holder thereof other than as expressly permitted above,
without any further action by the Corporation or such holder, such share of
Class I Preferred Stock so purported to be transferred shall, to the extent of
funds legally available therefor and subject to the other provisions of this
Restated Certificate, be automatically redeemed by the Corporation in accordance
with Section 8 hereof, and thereupon such share shall no longer be deemed
outstanding, and neither such holder nor any purported transferee thereof shall
have in respect thereof any of the voting powers, preferences or relative,
participating, optional or special rights ascribed to the shares of Class I
Preferred Stock hereunder, but rather such holder thereafter shall only be
entitled to receive the amount payable upon redemption in accordance with
Section 8. Certificates representing shares of Class I Preferred Stock shall be
legended to reflect the restrictions on transfer and automatic redemption
provided for herein.
Section 2. Definitions. For purposes of the Class I Preferred Stock, the
following terms shall have the meanings indicated:
2.1 ''Board of Directors'' shall mean the board of directors of the
Corporation or any committee thereof authorized by such board of directors to
perform any of its responsibilities with respect to the Class I Preferred Stock.
2.2 ''Class I Preferred Stock'' shall have the meaning set forth in Section 1
hereof.
2.3 ''Class IAM Preferred Stock'' shall mean the Class IAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
104
2.4 ''Class M Voting Preferred Stock'' shall mean the Class M ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.5 ''Class P Voting Preferred Stock'' shall mean the Class P ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.6 ''Class Pilot MEC Preferred Stock'' shall mean the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
2.7 ''Class S Voting Preferred Stock'' shall mean the Class S ESOP Voting
Junior Preferred Stock, par value $0.01 per share, of the Corporation.
2.8 ''Class SAM Preferred Stock'' shall mean the Class SAM Junior Preferred
Stock, par value $0.01 per share, of the Corporation.
2.9 ''Common Stock'' shall mean the common stock of the Corporation, par value
$0.01 per share.
2.10 ''Director Preferred Stocks'' shall mean collectively, the Class I
Preferred Stock, the Class IAM Preferred Stock, the Class Pilot MEC Preferred
Stock and the Class SAM Preferred Stock.
2.11 ''ESOP Convertible Preferred Stocks'' shall mean, collectively, the Class
1 ESOP Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred
Stock, each of the par value of $0.01 per share, of the Corporation.
2.12 ''Issue Date'' shall mean the first date on which shares of Class I
Preferred Stock are issued.
2.13 ''Liquidation Preference'' shall have the meaning set forth in Section
4.1 hereof.
2.14 ''Restated Certificate'' shall mean the Restated Certificate of
Incorporation of the Corporation, as amended from time to time.
2.15 ''Series A Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series A Convertible
Preferred Stock in Article FOURTH, Part I.A of this Restated Certificate.
2.16 ''Series B Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series B Preferred Stock
in Article FOURTH, Part I.B of this Restated Certificate.
2.17 ''Series C Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series C Junior
Participating Preferred Stock in Article FOURTH, Part I.C of this Restated
Certificate.
2.18 ''Series D Preferred Stock'' shall mean the series of Serial Preferred
Stock of the Corporation, without par value, designated Series D Redeemable
Preferred Stock in Article FOURTH, Part I.D of this Restated Certificate.
2.19 [Reserved]
2.20 ''set apart for payment'' shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
stock of the Corporation ranking on a parity with or junior to the Class I
Preferred Stock as to distributions upon liquidation, dissolution or winding up
of the Corporation are placed in a separate account of the Corporation or
delivered to a disbursing, paying or other similar agent, then ''set apart for
payment'' with respect to the Class I
105
Preferred Stock shall mean, with respect to such distributions, placing such
funds in a separate account or delivering such funds to a disbursing, paying or
other similar agent.
2.20 ''Termination Date'' shall have the meaning set forth in Article FIFTH,
Section 1.72 of this Restated Certificate.
2.21 ''Transfer Agent'' means the Corporation or such agent or agents of the
Corporation as may be designated from time to time by the Board of Directors as
the transfer agent for the Class I Preferred Stock.
2.22 ''Voting Preferred Stocks'' shall mean, collectively, the Class M Voting
Preferred Stock, the Class P Voting Preferred Stock and the Class S Voting
Preferred Stock.
Section 3. Dividends. The holders of shares of the Class I Preferred Stock
as such shall not be entitled to receive any dividends or other distributions
(except as provided in Section 4).
Section 4. Payments upon Liquidation.
4.1 In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for payment to the holders of any class or series of stock of the Corporation
that ranks junior to the Class I Preferred Stock as to amounts distributable
upon liquidation, dissolution or winding up of the Corporation, the holders of
the shares of Class I Preferred Stock shall be entitled to receive $0.01 per
share of Class I Preferred Stock (the ''Liquidation Preference''), but such
holders shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of Class I
Preferred Stock shall be insufficient to pay in full the Liquidation Preference
and the liquidation preference on all other shares of any class or series of
stock of the Corporation that ranks on a parity with the Class I Preferred Stock
as to amounts distributable upon liquidation, dissolution or winding up of the
Corporation, then such assets, or the proceeds thereof, shall be distributed to
the holders of shares of Class I Preferred Stock and any such other parity stock
ratably in accordance with the respective amounts that would be payable on such
shares of Class I Preferred Stock and any such other parity stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with or into one or more
corporations, or (ii) a sale, lease, exchange or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4.2 Subject to the rights of the holders of shares of any series or class of
stock ranking prior to or on a parity with the Class I Preferred Stock as to
amounts distributable upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made to the holders of the Class I
Preferred Stock, as and to the fullest extent provided in this Section 4, any
series or other class of stock of the Corporation that ranks junior to the Class
I Preferred Stock as to amounts distributable upon liquidation, dissolution or
winding up of the Corporation, shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Class I Preferred
Stock shall not be entitled to share therein.
Section 5. Shares to be Retired. All shares of Class I Preferred Stock
which shall have been issued and reacquired in any manner (other than pursuant
to Section 8.1) by the Corporation, other than in its capacity as escrow agent
in accordance with Section 1.2 hereof, shall be retired and restored to the
status of authorized but unissued shares of Class I Preferred Stock and, in the
case of shares redeemed pursuant to Section 8.1 hereof, shall not be reissued.
Section 6. Ranking.
6.1 Any class or series of stock of the Corporation shall be deemed to rank:
106
(a) prior to the Class I Preferred Stock as to the distribution of assets
upon liquidation, dissolution or winding up if the holders of such class or
series shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up, in preference or priority to the
holders of Class I Preferred Stock;
(b) on a parity with the Class I Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up, whether or not the
liquidation prices per share thereof be different from those of the Class I
Preferred Stock, if the holders of such class or series and the Class I
Preferred Stock shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in proportion to their respective
liquidation preferences, without preference or priority one over the other;
and
(c) junior to the Class I Preferred Stock, as to the distribution of assets
upon liquidation, dissolution or winding up, if the holders of Class I
Preferred Stock shall be entitled to the receipt of amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the
holders of shares of such class or series.
6.2 The Series A Preferred Stock, the Series B Preferred Stock, the Series D
Preferred Stock and the ESOP Convertible Preferred Stocks shall each be deemed
to rank prior to the Class I Preferred Stock as to amounts distributable upon
liquidation, dissolution or winding up. The other Director Preferred Stocks and
the Voting Preferred Stocks shall each be deemed to rank on a parity with the
Class I Preferred Stock as to amounts distributable upon liquidation,
dissolution or winding up. The Common Stock and the Series C Preferred Stock
shall each be deemed to rank junior to the Class I Preferred Stock as to amounts
distributable upon liquidation, dissolution or winding up.
Section 7. Voting. The holders of shares of Class I Preferred Stock shall
have the following voting rights; provided, however, that no holder of shares of
Class I Preferred Stock shall have any right to vote unless at such time such
person is an Independent Director or an initial ''Individual Party'' under the
Class I Stockholders' Agreement:
7.1 Until the Termination Date, the holders of the Class I Preferred Stock
shall have the right, voting separately as a class, to elect four Independent
Directors to the Board of Directors.
7.2 Unless the affirmative vote or consent of the holders of a greater number
of shares of Class I Preferred Stock shall then be required by law or this
Restated Certificate, and in addition to any other vote required by law or this
Restated Certificate, the affirmative vote or written consent of the holders of
at least a majority of all of the outstanding shares of Class I Preferred Stock,
voting separately as a class, shall be necessary for authorizing, effecting or
validating the amendment, alteration or repeal (including any amendment,
alteration or repeal by operation of merger or consolidation) of any of the
provisions of this Restated Certificate or of any certificate amendatory thereof
or supplemental thereto (including any Certificate of Designation, Preferences
and Rights or any similar document relating to any series of Serial Preferred
Stock) which would adversely affect the preferences, rights, powers or
privileges of the Class I Preferred Stock.
7.3 For purposes of the foregoing provisions of Sections 7.1 and 7.2, each
share of Class I Preferred Stock shall have one (1) vote per share. Except as
otherwise required by applicable law or as set forth herein, the shares of Class
I Preferred Stock shall not have any relative participating, optional or other
special voting rights and powers and the consent of the holder thereof shall not
be required for the taking of any corporate action.
Section 8. Redemption.
8.1 All outstanding shares of Class I Preferred Stock shall, to the extent of
funds legally available therefor and subject to the other provisions of this
Restated Certificate, be automatically redeemed on the Termination Date, at a
price of $0.01 per share of Class I Preferred Stock, as provided below. As
promptly as reasonably possible following the occurrence of the Termination
Date, the Corporation shall give notice thereof and of the redemption under this
Section 8 to all record holders of the Class I Preferred Stock.
107
From and after the redemption provided for in this Section 8.1, all rights of
the holders of Class I Preferred Stock as such, except the right to receive the
redemption price of such shares upon the surrender of certificates therefor,
shall cease and terminate and such shares shall not thereafter be deemed to be
outstanding for any purpose whatsoever.
8.2 The shares of Class I Preferred Stock shall, to the extent of funds
legally available therefor and subject to the other provisions of this Restated
Certificate, be automatically redeemed from time to time, in part, concurrently
with any purported transfer of shares of Class I Preferred Stock other than as
expressly permitted under Section 1.2 and the number of shares so redeemed shall
be equal to the number of shares so purported to be transferred. The redemption
price to be paid in connection with any redemption shall be $0.01 per share of
Class I Preferred Stock. From and after the redemption provided for in this
Section 8.2, all rights of such holder of Class I Preferred Stock as such,
except the right to receive the redemption price of such shares upon the
surrender of certificates representing the same, shall cease and terminate and
such share(s) shall not thereafter be deemed to be outstanding for any purpose
whatsoever.
8.3 Upon any such redemption provided for in Section 8.1 or 8.2 above, each
holder of a certificate formerly representing the share(s) of Class I Preferred
Stock so redeemed shall present and surrender such certificate to the
Corporation and thereupon the redemption price of such share(s) shall be paid to
or on the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled.
Section 9. Record Holders.
The Corporation and the Transfer Agent (if other than the Corporation) may
deem and treat the record holder of any share(s) of Class I Preferred Stock as
the true and lawful owner thereof for all purposes, and, except as otherwise
provided by law, neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
PART XI
Common Stock
Unless otherwise indicated, any reference in this Article FOURTH, Part XI to
''Section'', ''Subsection'', ''paragraph'', ''subparagraph'' or ''clause'' shall
refer to a Section, Subsection, paragraph, subparagraph or clause of this
Article FOURTH, Part XI. Capitalized terms used and not otherwise defined in
this Article FOURTH, Part XI, shall have the respective meanings given those
terms in the introductory sentence of Article FOURTH.
Section 1. Dividends. Subject to any rights to receive dividends to which
the holders of the shares of any other class or series of stock may be entitled,
the holders of shares of Common Stock shall be entitled to receive dividends, if
and when declared payable from time to time by the Board of Directors, from any
funds legally available therefor.
Section 2. Liquidation. In the event of any dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary, after there
shall have been paid to the holders of shares of any other class or series of
stock ranking prior to the Common Stock in respect thereof the full amounts to
which they shall be entitled, and subject to any rights of the holders of any
other class or series of stock to participate therein, the holders of the then
outstanding shares of Common Stock shall be entitled to receive, pro rata, any
remaining assets of the Corporation available for distribution to its
stockholders. Subject to the foregoing, the Board of Directors may distribute in
kind to the holders of the shares of Common Stock such remaining assets of the
Corporation, or may sell, transfer or otherwise dispose of all or any part of
such remaining assets to any other corporation, trust or other entity and
receive payment therefor in cash, stock or obligations of such, other
corporations, trust or entity or any combination thereof, and may sell all or
any part of the consideration so received, and may distribute the consideration
so received or any balance thereof in kind to holders of the shares of Common
Stock. The voluntary sale, conveyance,
108
lease, exchange or transfer of all or substantially all the property or assets
of the Corporation (unless in connection therewith the dissolution, liquidation
or winding up of the Corporation is specifically approved), or the merger or
consolidation of the Corporation into or with any other corporation, or the
merger of any other corporation into it, or any purchase or redemption of shares
of stock of the Corporation of any class, shall not be deemed to be a
dissolution, liquidation or winding up of the corporation for the purpose of
this Section 2.
Section 3. Voting. Except as provided by law or this Restated Certificate
of Incorporation:
a. each outstanding share of Common Stock of the Corporation shall entitle
the holder thereof to one vote on each matter submitted to a vote at a meeting
of stockholders; and
b. until the Termination Date (as defined in Article FIFTH, Section 1.72),
the holders of Common Stock, voting as a separate class, shall be entitled to
elect five Public Directors (as defined in Article FIFTH, Section 2.3) of the
Corporation.
PART XII
General Provisions
No Preemptive Rights, Etc. Except as otherwise provided herein, no holder of
stock of the Corporation of any class shall have any preemptive, preferential or
other right to purchase or subscribe for any shares of stock, whether now or
hereafter authorized, of the Corporation of any class, or any obligations
convertible into, or any options or warrants to purchase, any shares of stock,
whether now or hereafter authorized, of the Corporation of any class, other than
such, if any, as the Board of Directors may from time to time determine, and at
such price as the Board of Directors may from time to time fix; and any shares
of stock or any obligations, options or warrants which the Board of Directors
may determine to offer for subscription to holders of any shares of stock of the
Corporation may, as the Board of Directors shall determine, be offered to
holders of shares of stock of the Corporation of any class or classes or series,
and if offered to holders of shares of stock of more than one class or series,
in such proportions as between such classes and series as the Board of Directors
may determine.
FIFTH. GOVERNANCE. Unless otherwise expressly indicated, references in
this Article FIFTH to any ''Section'', ''Subsection'', ''paragraph'',
''subparagraph'' or ''clause'' shall refer to such Section, Subsection,
paragraph, subparagraph or clause of this Article FIFTH.
Section 1. Definitions. As used in this Restated Certificate, unless the
context otherwise requires, the following terms shall have the following
meanings:
1.1 ''Affiliate'' has the meaning defined in Rule 12b-2 promulgated under the
Exchange Act.
1.2 ''Airline Business'' means the business of operating an Air Carrier,
together with any business or activity reasonably related to or in support of
any and all such operations engaged in by the Corporation or any of its
Subsidiaries at or during the one year period immediately prior to the Effective
Time.
1.3 ''Air Carrier'' means an ''air carrier'' as defined in Section 1301(3) of
the Federal Aviation Act of 1958, 49 U.S.C. (S)(S) 1301 et seq., as amended, or
any successor act thereto.
1.4 ''ALPA'' means the Air Line Pilots Association, International.
1.5 ''Available Unissued ESOP Shares'' shall mean as of the date of
determination and without duplication, (a) the number of shares of Common Stock
that would be issuable upon conversion of that portion of (w) 17,675,345 shares
of ESOP Convertible Preferred Stock plus (x) an aggregate of 17,675,345 shares
of Class P Voting Preferred Stock, Class M Voting Preferred Stock and Class S
Voting Preferred Stock plus (y) the number of Additional Shares (as defined in
Section 1.10 of the Recapitalization Agreement) plus (z) an aggregate number of
shares of Class P
109
Voting Preferred Stock, Class M Voting Preferred Stock and Class S Voting
Preferred Stock that is equal to the number of Additional Shares that, in the
case of each of clause (w), (x), (y) and (z), as of the date of determination of
Available Unissued ESOP Shares, have not been issued pursuant to Section 1.6 or
1.10 of the Recapitalization Agreement as ESOP Convertible Preferred Stock,
Class P Voting Preferred Stock, Class M Voting Preferred Stock, Class S Voting
Preferred Stock or Common Stock, plus (b) the number of shares of Common Stock
that have been credited to the Supplemental ESOP (other than pursuant to Section
1.6 or 1.10 of the Recapitalization Agreement) and that have not been issued.
1.6 ''Bankrupt'' means ''insolvent'' as defined in Section 101(32) of the
Bankruptcy Code, 11 U.S.C. (S)(S) 101 et seq., as amended.
1.7 ''Bankruptcy Opinions'' has the meaning defined in Subsection
3.4(b)(vii)(B).
1.8 ''Board'' means the Board of Directors of the Corporation.
1.9 ''Board Committees'' has the meaning defined in Subsection 4.1.10.
1.10 ''Business Combination'' means a ''business combination'' as defined in
Section 203 of the GCL.
1.11 ''Chief Executive Officer'' means the Chief Executive Officer of the
Corporation.
1.12 ''Class 1 ESOP Convertible Preferred Stock'' means the Class 1 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
1.13 ''Class 2 ESOP Convertible Preferred Stock'' means the Class 2 ESOP
Convertible Preferred Stock, par value $0.01 per share, of the Corporation.
1.14 ''Class I Preferred Stock'' means the Class I Junior Preferred Stock, par
value $0.01 per share, of the Corporation.
1.15 ''Class I Stockholders' Agreement'' means the Class I Preferred
Stockholders' Agreement, dated as of the date of the Effective Time, among the
Corporation, ALPA, the IAM and the holders of the Class I Preferred Stock, as
amended from time to time.
1.16 ''Class IAM Director'' has the meaning defined in Subsection 2.2.
1.17 ''Class IAM Preferred Stock'' means the Class IAM Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
1.18 ''Class M Voting Preferred Stock'' means the Class M ESOP Voting Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
1.19 ''Class P Voting Preferred Stock'' means the Class P ESOP Voting Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
1.20 ''Class Pilot MEC Director'' has the meaning defined in Subsection 2.2.
1.21 ''Class Pilot MEC Preferred Stock'' means the Class Pilot MEC Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
1.22 ''Class SAM Preferred Stock'' means the Class SAM Junior Preferred Stock,
par value $0.01 per share, of the Corporation.
110
1.23 ''Class SAM Stockholders' Agreement'' means the Class SAM Stockholders'
Agreement, dated as of the date of the Effective Time, between the Corporation
and the holders of Class SAM Preferred Stock, as amended from time to time.
1.24 ''Class S Voting Preferred Stock'' means the Class S ESOP Voting Junior
Preferred Stock, par value $0.01 per share, of the Corporation.
1.25 ''Collective Bargaining Agreement'' means any agreement between the
Corporation or any of its Subsidiaries and any labor union representing the
Corporation's or any of its Subsidiaries' employees based in the United States
that relates to rates of pay, rules, working conditions or any other incident or
aspect of employment with the Corporation or any of its Subsidiaries.
1.26 ''Common Equity'' means, in the aggregate and without double-counting,
(i) the Common Stock outstanding at the time in question, (ii) the Common Stock
issuable upon conversion of the ESOP Convertible Preferred Stock and Voting
Stock outstanding at the time in question, (iii) the Common Stock which is both
(x) issuable upon exercise, conversion or exchange of Equity Securities and (y)
included in the definition of "Fully Diluted Shares" pursuant to Subsection
1.10(d) of the Recapitalization Agreement, and (iv) the Common Stock represented
by the Permitted Bankruptcy Equity outstanding at the time in question, if any;
but excluding any Equity Securities (other than Permitted Bankruptcy Equity,
Equity Securities issued pursuant to Sections 1.6 and 1.10 of the
Recapitalization Agreement and Equity Securities included in the definition of
"Fully Diluted Shares" pursuant to Subsection 1.10(d) of the Recapitalization
Agreement, as well as any other Equity Securities issued upon exercise or
conversion of any such Permitted Bankruptcy Equity or any other such Equity
Securities) issued in connection with a Non-Dilutive Issuance, including,
without limitation, any Equity Securities (a) outstanding immediately prior to
the Effective Time that were not included in the definition of ''Fully Diluted
Shares'' pursuant to Subsection 1.10(d) of the Recapitalization Agreement or (b)
issued pursuant to Subsection 3.4(b)(vii)(A) or Subsection 3.4(b)(vii)(C) (II),
(III) or (IV) (including, in each case the shares of Equity Securities
underlying such Equity Securities or issuable upon the exercise, conversion or
exchange thereof) hereof.
1.27 ''Common Stock'' means the common stock, par value $0.01 per share, of
the Corporation.
1.28 ''Common Stock Transaction'' has the meaning defined in Subsection 3.5.
1.29 ''Competitive Action Plan'' means the Corporation's business plan to
develop a low cost operation, which is intended to compete against other low
cost Air Carriers.
1.30 ''Corporation'' means UAL Corporation.
1.31 ''Director'' means a director of the Corporation.
1.32 ''Director Incentive Plan'' means the UAL Corporation 1992 Stock Plan for
Outside Directors.
1.33 ''Distribution Companies'' means Galileo International Partnership,
Apollo Travel Services Partnership and Galileo Japan Partnership, each a
Delaware general partnership.
1.34 ''Effective Time'' has the meaning defined in the Recapitalization
Agreement.
1.35 ''Employee Directors'' has the meaning defined in Subsection 2.2.
1.36 ''entire Board'' means all Directors of the Corporation who would be in
office if there were no vacancies.
1.37 ''Equity Securities'' means common stock of the Corporation or any debt,
equity or other security or contractual right convertible into or exercisable or
exchangeable for common stock or any warrants, options or other rights to
purchase common stock or such other Equity Securities, but in no event shall the
term ''Equity Securities'' include non-voting, non-convertible preferred stock.
111
1.38 ''ESOP Convertible Preferred Stock'' means collectively, the Class 1 ESOP
Convertible Preferred Stock and the Class 2 ESOP Convertible Preferred Stock and
any other securities into which such preferred stocks are changed or
reclassified, into which they are converted or for which they are exchanged.
1.39 ''ESOPs'' means collectively, the UAL Corporation Employee Stock
Ownership Plan and the UAL Corporation Supplemental ESOP and any similar or
successor plans thereto.
1.40 ''Exchange Act'' means the Securities Exchange Act of 1934, as amended,
or any successor act thereto.
1.41 ''Existing Plans'' means collectively, the United Air Lines, Inc. Flight
Attendant Employees' Savings Plan; the United Air Lines, Inc. Management and
Salaried Employees' Personal Investment Program; the United Air Lines, Inc.
Union Ground Employees' Long Term Investment Program; the United Air Lines, Inc.
Pilots' Directed Account Retirement Income Plan; and the Employees' Stock
Purchase Plan of UAL Corporation.
1.42 ''Extraordinary Matters'' means (a) any matter that pursuant to the GCL
requires stockholder approval, (b) any Substantive Amendment to the Restated
Bylaws and (c) any Other Extraordinary Matters.
1.43 ''First Refusal Agreement'' means the First Refusal Agreement, dated as
of the date of the Effective Time, among the Corporation, ALPA, the IAM and the
Salaried/Management Employee Director, as amended from time to time.
1.44 ''GCL'' means the General Corporation Law of the State of Delaware, as
amended from time to time.
1.45 ''Gross Proceeds'' means, with respect to any sale, lease, exchange,
surrender to or at the direction of a lessor, or other disposition of assets,
whether tangible or intangible, real or personal, or the issuance of ownership
interests, by any Person (each, a ''Gross Proceeds Event''), (a) (i) with
respect to owned assets or the issuance of ownership interests, the sum of (A)
the aggregate cash consideration received by such Person in connection with such
Gross Proceeds Event, (B) the fair market value of (1) all cash consideration to
be received in the future (including future payments evidenced by a note or
other instrument) by such Person in connection with such Gross Proceeds Event
and (2) all future payments that are obligations of such Person and are assumed
by another Person in connection with such Gross Proceeds Event and (C) the fair
market value of all other non-cash consideration, and (ii) with respect to
leased assets, the fair market value of such assets (in each case with respect
to clauses (i)(B) and (i)(C) and clause (ii), such fair market value as
determined in good faith by the Corporation as of the date of such Gross
Proceeds Event), minus (b) the sum, without duplication, of:
(i) any taxes (including, but not limited to, any alternative minimum taxes
and other similar taxes) that are paid, actually payable or would be payable
(absent the availability of any net operating loss carryover, tax credit or
other tax benefit that reduces the amount paid or payable) to any Federal,
state, local or foreign taxing authority and that are directly or indirectly
attributable to such Gross Proceeds Event; and
(ii) the amount of fees and commissions (including, without limitation,
reasonable investment banking fees), legal, title and recording tax expenses
and other similar costs and expenses directly incident to such Gross Proceeds
Event that are paid or payable by such Person, other than fees and commissions
(including, without limitation, management consulting and financial services
fees) paid or payable to Affiliates of such Person (or officers or employees
of such Person or any Affiliate of such Person).
1.46 ''IAM'' means the International Association of Machinists and Aerospace
Workers.
1.47 ''Investment'' means all (A) investments in any Person by stock purchase,
capital contribution, loan, advance, guarantee of obligations of (other than any
guarantee of an obligation of the Corporation or any of its Subsidiaries) or
creation or assumption by the Corporation or any of its Subsidiaries of any
other liability in respect of any indebtedness (other than indebtedness of the
Corporation or any of its Subsidiaries) of such Person and (B) investments in
any other property, other than:
112
(i) an investment in the ordinary course of business in the Corporation,
any of its Subsidiaries or the Distribution Companies, so long as such
investment is in the Airline Business;
(ii) investments in the ordinary course of business in direct obligations
of the United States of America, or obligations of any instrumentality or
agency thereof, or obligations the payment of which is unconditionally
guaranteed by the United States of America or any instrumentality or agency
thereof;
(iii) investments in the ordinary course of business in obligations of any
state or municipal government or obligations of any instrumentality or agency
thereof;
(iv) investments in the ordinary course of business in readily marketable
commercial paper;
(v) investments in the ordinary course of business in short-term deposit
accounts in, or negotiable certificates of deposit or negotiable bankers
acceptances issued by, any bank or trust company organized under the laws of
the United States or a state thereof or Canada, Western Europe or Japan;
(vi) investments in negotiable instruments for collection in the ordinary
course of business;
(vii) investments in tangible assets to be used in the ordinary course of
business of the Corporation or any of its Subsidiaries;
(viii) investments in the ordinary course of business in stocks of
investment companies registered under the Investment Company Act of 1940, as
amended, which are no-load money market funds and which invest primarily in
obligations of the type described in clause (ii), (iii) or (iv) above and
which are classified as current assets in accordance with generally accepted
accounting principles;
(ix) investments in Persons resulting from non-payment by such Persons of
receivables of the Corporation or any of its Subsidiaries arising in the
ordinary course of business;
(x) investments in connection with the settlement of claims of the
Corporation or any of its Subsidiaries in financially-distressed companies or
in connection with bankruptcy proceedings;
(xi) investments in airline clearing houses, other similar industry
organizations or other Air Carriers arising out of receivables payable to the
Corporation or any of its Subsidiaries relating to airline tickets and similar
liabilities and arising in the ordinary course of business of the Corporation
or its Subsidiaries;
(xii) advances to employees of the Corporation or its Subsidiaries made in
the ordinary course of business;
(xiii) investments in Persons pursuant to obligations of the Corporation or
any of its Subsidiaries, including contingent obligations, in effect on the
Effective Time;
(xiv) other investments made in the ordinary course of the Corporation's
and its Subsidiaries' business in connection with the Corporation's and its
Subsidiaries' cash management program or fiscal management policies and
practices (including, without limitation, interest rate, currency and
commodity risk management and similar activities);
(xv) investments in the ordinary course of business of the Corporation or
its Subsidiaries in ARINC, SITA, Air Cargo, Inc., Scheduled Airline Traffic
Offices, Inc., organizations used to provide aircraft fuel services or other
similar industry organizations;
(xvi) the purchase or other acquisition by the Corporation or any of its
Subsidiaries from Persons other than the Corporation or any of its
Subsidiaries of evidences of indebtedness or other obligations or securities
issued by the Corporation or any of its Subsidiaries;
113
(xvii) investments in Persons through customary indemnity obligations
contained in contracts of the Corporation or its Subsidiaries; and
(xviii) loans or advances to the Corporation by any of its Subsidiaries.
1.48 ''Labor Affiliate'' means (a) any Person that has been formed by or is an
Affiliate of one or more labor groups representing employees of the Corporation
or any of its Subsidiaries or (b) any Person determined by the Board to be a
Person in which a substantial group of employees of the Corporation or any of
its Subsidiaries, acting as an organized group, owns a majority ownership
interest.
1.49 ''Management Public Directors'' has the meaning defined in Subsection
2.3.
1.50 ''Market Capitalization'' means the aggregate market value of a Public
Company's voting stock held by Persons that are not Affiliates of such Public
Company as set forth in the most recent Form 10-K or any successor form of such
Public Company preceding the date of determination.
1.51 ''Measuring Period'' means the 365-day period commencing on the Effective
Time.
1.52 ''Non-Dilutive Issuance'' has the meaning defined in Subsection
3.4(b)(vii).
1.53 ''Other Board Committee'' has the meaning defined in Subsection 4.1.10.
1.54 ''Other Extraordinary Matters'' has the meaning defined in Subsection
3.4(b).
1.55 ''Outside Public Directors'' has the meaning defined in Subsection 2.3.
1.56 ''Permitted Bankruptcy Equity'' has the meaning defined in Subsection
3.4(b)(vii)(B).
1.57 ''Person'' means an individual, corporation, association, partnership,
joint venture, limited liability company, trust, estate, unincorporated
organization, governmental authority, judicial entity or other entity.
1.58 ''Post-Termination Meeting'' has the meaning defined in Subsection
2.13(b).
1.59 ''Public Company'' means a Person with a class of securities registered
pursuant to Section 12 of the Exchange Act.
1.60 ''Public Directors'' has the meaning defined in Subsection 2.3.
1.61 ''Recapitalization Agreement'' means the Recapitalization Agreement,
dated as of March 25, 1994, among the Corporation, ALPA and the IAM, as amended
from time to time.
1.62 ''Restated Bylaws'' means the Amended and Restated Bylaws of the
Corporation, as amended from time to time.
1.63 ''Restated Certificate'' means the Restated Certificate of Incorporation
of the Corporation, as amended from time to time.
1.64 ''Rights Agreement'' means the Rights Agreement, dated as of December 11,
1986, between the Corporation and First Chicago Trust Company of New York
(formerly Morgan Shareholder Services Trust Company), as amended from time to
time.
114
1.65 ''Salaried and Management Employee Investment'' means the concessions
and other investments of employees who perform the functions currently performed
by the salaried and management employees of the Corporation or United Air Lines,
Inc. (including any functions which such group of employees begins performing in
the future) as set forth in Schedule 5.8(iii) to the Recapitalization Agreement,
which shall be provided for the term identified in such Schedule 5.8(iii).
1.66 ''Salaried/Management Employee Director'' has the meaning defined in
Subsection 2.2.
1.67 ''Significant Labor-Related Business Transaction'' means any purchase,
sale, transfer or other disposition of assets, or the issuance of capital stock,
by any Person, or any merger or consolidation with any Person, in a single
transaction or series of related transactions, in which the Gross Proceeds to be
received by any Person or Persons in connection with such purchase, sale,
transfer, disposition, issuance, merger or consolidation exceeds $1,000,000.
1.68 ''Solvency Determination'' has the meaning defined in Subsection
3.4(b)(vii)(B).
1.69 ''Stockholders'' means the stockholders of the Corporation.
1.70 ''Subsidiary'' means, with respect to any Person (herein referred to as
the ''parent''), any corporation, partnership, association or other business
entity which such parent, directly or indirectly, controls, including, without
limitation, any such Person of which securities or other ownership interests
representing 50% or more of the equity, or 50% or more of the ordinary voting
power or voting power representing the right to elect 50% or more of the Board
of Directors or similar governing body, or 50% or more of the general
partnership interests, are, at the time any determination is being made, owned,
controlled or held by such parent; provided, however, that the term
''Subsidiary'' shall not include a Distribution Company where the Corporation
does not, directly or indirectly, control the particular actions or activities
under consideration (including the power, under the relevant organizational
documents of such Distribution Company, to block such actions or activities)
with respect to such Distribution Company.
1.71 ''Substantive Amendment'' means the adoption of any material amendment
to, the deletion or repeal of, or the adoption of any provision materially
inconsistent with, any of the following sections of the Restated Bylaws: 2.2(a),
2.6(a), 2.6(c), 3.1, 3.2, 3.3, 3.6, 3.7, 3.8, 3.9(a), 3.10, 3.12(a), 3.14(a),
4.1(a), 4.2, 4.3, 4.5(a), 4.7(a), 4.8(a), 5.1, 5.2(a), 5.3(a), 5.4(a), 5.6(a)
and 8.1.
1.72 ''Termination Date'' means, except as otherwise provided in this Restated
Certificate, the date on which the Common Equity held in the ESOPs, the Existing
Plans or in any other employee trusts or pension, retirement or other employee
benefit plans sponsored by the Corporation or any of its Subsidiaries for the
benefit of its employees as of the close of business on such date, plus the
number of Available Unissued ESOP Shares represent, in the aggregate, less than
20% of (a) the Common Equity of the Corporation plus (b) the number of Available
Unissued ESOP Shares.
1.73 ''Union Directors'' has the meaning defined in Subsection 2.2.
1.74 ''United Air Lines, Inc.'' means United Air Lines, Inc., a Delaware
corporation, or any successor to all or substantially all of the assets thereof.
1.75 ''Voting Stock'' means collectively, the Common Stock, Class IAM
Preferred Stock, Class M Voting Preferred Stock, Class Pilot MEC Preferred
Stock, Class P Voting Preferred Stock, Class SAM Preferred Stock and Class S
Voting Preferred Stock.
Section 2. Directors.
2.1 General Powers. Except as otherwise provided in this Restated
Certificate, the business and affairs of the Corporation shall be managed by or
under the direction of the Board. The Board may adopt such rules and
115
regulations, not inconsistent with this Restated Certificate, the Restated
Bylaws or applicable law, as it may deem proper for the conduct of its meetings
and the management of the Corporation. In addition to the powers conferred
expressly by this Restated Certificate and the Restated Bylaws, the Board may
exercise all powers and perform all acts that are not required, by this Restated
Certificate, the Restated Bylaws or applicable law, to be exercised or performed
by the Stockholders.
2.2 Number and Composition. Subject to Article FOURTH, Parts I.A and I.B of
this Restated Certificate and Subsection 2.13 of this Article FIFTH, the Board
shall consist of twelve members and shall be comprised as follows: five
Directors shall be designated Public Directors who shall be elected, subject to
Subsection 2.3, by the holders of the Common Stock in accordance with Article
FOURTH, Part XI of this Restated Certificate, voting separately as a class; four
Directors shall be designated Independent Directors who shall be elected,
subject to Subsection 2.4, by the holders of the Class I Preferred Stock in
accordance with Article FOURTH, Part X of this Restated Certificate, voting
separately as a class; and three Directors shall be designated Employee
Directors, of whom one shall be elected by the holders of the Class IAM
Preferred Stock, voting separately as a class, in accordance with Article
FOURTH, Part VIII of this Restated Certificate (the ''Class IAM Director''), one
shall be elected by the holders of the Class Pilot MEC Preferred Stock, voting
separately as a class, in accordance with Article FOURTH, Part VII of this
Restated Certificate (the ''Class Pilot MEC Director,''0 and together with the
Class IAM Director, the ''Union Directors'') and one shall be elected by the
holders of the Class SAM Preferred Stock, voting separately as a class, in
accordance with Article FOURTH, Part IX of this Restated Certificate (the
''Salaried/Management Employee Director''). The Union Directors and the
Salaried/Management Employee Director are referred to in this Restated
Certificate collectively as the ''Employee Directors.''
2.3 Qualifications of Public Directors. Until the Termination Date, of the
five Public Directors, (a) three shall be individuals who are not and have never
been an officer or employee of, or a provider of professional services to, the
Corporation or any of its Subsidiaries (collectively, the ''Outside Public
Directors'') and (b) two shall be, at the time of their election, substantially
full-time employees of the Corporation or one of its Subsidiaries, one of whom,
in addition, to the fullest extent such additional qualification is permitted by
law, shall be, at the time of such election, the Chief Executive Officer, and
the second of whom, in addition, to the fullest extent such additional
qualification is permitted by law, shall be a senior executive officer of the
Corporation satisfactory to the Chief Executive Officer (collectively, the
''Management Public Directors''). The Outside Public Directors and the
Management Public Directors are referred to in this Restated Certificate
collectively as the ''Public Directors.''
2.4 Qualifications of Independent Directors. Until the Termination Date, no
Independent Director shall either (a) without the consent of both Union
Directors and all of the Public Directors, have a current affiliation (other
than an affiliation that may result from being a member of the Board) or
business relationship with the Corporation or any of its Subsidiaries
(collectively, an ''affiliation'') which is required to be disclosed or have had
a prior such affiliation (other than an affiliation that may result from having
been an Independent Director) which, had such Independent Director been a
Director of the Corporation at the time of such prior affiliation, would have
been required to be disclosed, pursuant to Item 7 of Schedule 14A promulgated
under the Exchange Act (or any successor provision thereto) or (b) be an
officer, director, trustee or official of any labor organization that serves as
a collective bargaining ''representative'' under the Railway Labor Act, 45
U.S.C. (S)(S) 151 et seq., or the National Labor Relations Act, 29 U.S.C. (S)(S)
141 et seq. or any similar laws as may from time to time be in effect. In
addition to the foregoing, until the Termination Date, at the time of the
election or appointment of an Independent Director to the Board, at least two of
the Independent Directors (or at least one of the Independent Directors if only
one Independent Director vacancy is being filled and none of the incumbent
Independent Directors meet the criteria specified in clause (i) or (ii) below),
after giving effect to the election or appointment of the Independent Directors
being elected or appointed, shall be, or have been at the time of their initial
election or appointment as Independent Directors, either (i) a senior executive
officer of a company (other than the Corporation) with revenues during such
company's prior fiscal year in excess of $1 billion as set forth in such
company's most recent annual financial statements or (ii) a member of the board
of directors of at least one other Public Company with a Market Capitalization
in excess of $1 billion as of the date of such Public Company's most recent
annual financial statements.
116
2.5 Nomination of Board's Nominees for Public Directors. Until the
Termination Date, the Board's nominees for the Outside Public Directors shall be
nominated by the Outside Public Director Nomination Committee in accordance with
Subsection 4.1.8. Until the Termination Date, the Board's nominees for the
Management Public Directors shall be nominated by action of the Board by the
affirmative vote of at least a majority of the votes entitled to be cast by the
entire Board. For purposes of this Subsection 2.5 and Subsection 4.1.8,
''nominate'' means to designate those persons who are recommended by the Board
for election as Public Directors in the proxy materials distributed by the
Corporation to the holders of its Voting Stock and to take such other action as
required to place their name in nomination for election at the meeting of
Stockholders called in accordance with such proxy material.
2.6 Term of Office. Subject to Subsection 2.13(b), and except as otherwise
provided in this Restated Certificate, each Director shall hold office until the
next annual meeting of Stockholders and until his or her successor is elected
and qualified, subject to such Director's earlier death, resignation or removal;
provided, however, that, until the Termination Date, the term of an Outside
Public Director or an Independent Director shall automatically terminate if
during such term the status of such Director shall change such that the
qualification requirements set forth in Subsection 2.3(a) or the first sentence
of Subsection 2.4, as applicable, are no longer satisfied.
2.7 Resignation of Directors. Any Director may resign at any time upon
written notice to the Corporation.
2.8 Removal of Directors. (a) Any Director may be removed without cause at
any time only by the affirmative vote of the holders of a majority in voting
power of the shares of the class or classes or series of stock that are entitled
to vote for the election of such Director, voting separately as a class or
series.
(b) Any Director or the entire Board may be removed for cause as provided
under the GCL.
2.9 Vacancies on the Board. Vacancies on the Board may only be filled as
follows:
2.9.1 Vacancies of Public Directors. Until the Termination Date, in the
event of a vacancy of an Outside Public Director, such vacancy may be filled
only by the Outside Public Director Nomination Committee in accordance with
Subsection 4.1.8. Until the Termination Date, in the event of a vacancy of a
Management Public Director, such vacancy may be filled only by action of the
Board by the affirmative vote of at least a majority of the votes entitled to be
cast by the entire Board with an individual who would be eligible to be
nominated for election to such position in accordance with Subsections 2.3 and
2.5.
2.9.2 Vacancies of Independent Directors. Until the Termination Date, in the
event of a vacancy of an Independent Director, such vacancy may be filled only
by the Independent Director Nomination Committee in accordance with Subsection
4.1.6.
2.9.3 Vacancies of Employee Directors. In the event of a vacancy of an
Employee Director, such vacancy may be filled only by a vote of the class or
series of stock that elected such Director.
2.9.4 Board Action During Vacancies. Until the Termination Date, in the
event of a vacancy on the Board of an Employee Director or Public Director, or
in the event of a vacancy of an Independent Director who immediately prior to
the occurrence of such vacancy was a member of a Board Committee of which only
one Independent Director was a member, then, subject to the fiduciary duties of
the remaining Directors or members of such Board Committee, as the case may be,
then in office, neither the Board nor such Board Committee may take any action
(other than to fill such vacancy of such Public Director), until after the
earlier of (a) 20 days following the occurrence of such vacancy and (b) the time
that such vacancy is filled in accordance with the provisions of this Restated
Certificate.
2.10 Quorum Requirements of Board Meetings. Until the Termination Date, at
all meetings of the Board, other than meetings of Board Committees, a quorum
shall exist only if (a) Directors having at least a majority of the votes
entitled to be cast by the entire Board are present at the meeting and (b)
unless otherwise consented to by each
117
of the Union Directors, if less than all of the Public Directors, Independent
Directors and Employee Directors are present, or if Directors other than the
Public Directors, Independent Directors and Employee Directors are present, the
number of votes constituting a majority of the votes present is no greater than
the sum of (i) two plus (ii) the aggregate number of votes entitled to be cast
by the Independent Directors present at such meeting.
2.11 Voting by Directors. Subject to any greater or additional vote of the
Board or of any class of Directors required by law or by this Restated
Certificate, including, without limitation, Section 3, an act of the Board shall
require the affirmative vote of at least a majority of the votes entitled to be
cast by the Directors present at a meeting of the Board at which a quorum is
present. Each Director shall have one vote; provided, however, that, until the
Termination Date, at any time there is a vacancy of one or more Independent
Directors, then with respect to any action of the Board (but not including any
action of a Board Committee), each Independent Director shall have the number of
votes equal to a fraction, (a) the numerator of which equals four and (b) the
denominator of which equals four minus the number of vacancies then existing
among the Independent Directors.
2.12 Quorum Requirements of Stockholder Meetings. Until the Termination
Date, except as otherwise required by law or by this Restated Certificate, the
presence in person or by proxy of the holders of outstanding shares representing
at least a majority of the total voting power of all outstanding shares entitled
to vote at a meeting of Stockholders shall constitute a quorum at a meeting of
Stockholders; provided, however, that where a separate vote of a class or
classes or series of stock is required, the presence in person or by proxy of
the holders of outstanding shares representing at least a majority of the total
voting power of all outstanding shares of such class or classes or series shall
constitute a quorum thereof entitled to take action with respect to such
separate vote.
2.13 Events Upon the Occurrence of the Termination Date.
(a) Upon the occurrence of the Termination Date, the Board shall take all
necessary and appropriate actions to cause to be filed and become effective a
restated certificate of incorporation of the Corporation under Section 245 of
the GCL, or any successor provision then in effect, deleting all provisions in
this Restated Certificate that, by their terms, are no longer in effect and
operative as a result of the occurrence of the Termination Date and
integrating into a single document all other amendments to this Restated
Certificate that have been adopted between the date hereof and the Termination
Date.
(b) Upon the occurrence of the Termination Date, the Outside Public
Director Nomination Committee shall, on behalf of the Board, subject to
Subsection 2.13(c), nominate the individuals to be the Board's nominees for
election as Directors (other than the Employee Directors) to be recommended
for election by the Stockholders entitled to vote thereon at a meeting of
Stockholders to be held promptly following the Termination Date (the ''Post-
Termination Meeting''), and the officers of the Corporation shall take all
necessary and appropriate actions to promptly call and hold the Post-
Termination Meeting. Upon the effectiveness of the election of the Directors
elected at such Post-Termination Meeting, the term of office of each Director
in office immediately prior thereto (except any such Director re-elected in
such election or as to whom no successor is elected in such election) shall
terminate.
(c) Notwithstanding any other provision in this Restated Certificate, but
subject to Article FOURTH, Parts I.A and I.B, following the Termination Date
the Board shall consist of twelve members and shall be comprised as follows:
nine Directors shall be elected by the holders of the outstanding Common Stock
and of any other class or series of stock entitled to vote thereon together
with the Common Stock, voting together as a single class; one Director shall
be elected by the holders of the outstanding Class IAM Preferred Stock, voting
separately as a class; one Director shall be elected by the holders of the
outstanding Class Pilot MEC Preferred Stock, voting separately as a class; and
one Director shall be elected by the holders of the outstanding Class SAM
Preferred Stock, voting separately as a class. After the Termination Date, and
until the IAM Termination Date (as defined in Article FOURTH, Part VIII of
this Restated Certificate) in the case of the Director elected by the holders
of the outstanding Class IAM Preferred Stock or the ALPA Termination Date (as
defined in Article FOURTH, Part VII of this Restated Certificate) in the case
of the Director elected by the holders of the outstanding Class Pilot MEC
Preferred Stock, the Director elected by the holders of the outstanding Class
IAM Preferred Stock and the Director elected by the holders of the outstanding
Class Pilot MEC Preferred Stock
118
shall each be deemed a ''Union Director,'' and collectively shall be deemed
''Union Directors,'' for purposes of this Restated Certificate. After the
Termination Date, and until the IAM Termination Date in the case of the
Director elected by the holders of the outstanding Class IAM Preferred Stock,
until the ALPA Termination Date in the case of the Director elected by the
holders of the outstanding Class Pilot MEC Preferred Stock, and until the
earlier of the IAM Termination Date and the ALPA Termination Date in the case
of the Director elected by the holders of the outstanding Class SAM Preferred
Stock, the Director elected by the holders of the outstanding Class IAM
Preferred Stock, the Director elected by the holders of the outstanding Class
Pilot MEC Preferred Stock and the Director elected by the holders of the
outstanding Class SAM Preferred Stock shall each be deemed an ''Employee
Director,'' and collectively shall be deemed ''Employee Directors,'' for
purposes of this Restated Certificate.
Section 3. Special Voting Provisions.
3.1 Matters Requiring Stockholder Vote under the GCL.
3.1.1 Amendment to the Restated Certificate. Until the Termination Date,
subject to Subsection 3.8, notwithstanding that a lesser or no vote may be
required by law of either the Board or the Stockholders, and in addition to any
other vote of the Board or the Stockholders required by law or this Restated
Certificate, any amendment to the Restated Certificate (excluding a restatement
of the Restated Certificate effected solely pursuant to Section 245 of the GCL
(which merely restates and integrates but does not further amend this Restated
Certificate) and any action taken by the Board in accordance with this Restated
Certificate pursuant to Section 151(g) of the GCL not inconsistent with this
Restated Certificate) must be approved by one of the following:
(a) (i) the affirmative vote of at least a majority of the votes entitled
to be cast by the Directors present at a meeting of the Board at which a
quorum is present, which vote must include the affirmative vote of at least
six of the votes entitled to be cast by the Directors present at the Board
meeting other than the Employee Directors, plus (ii) the affirmative vote of
at least 75% in voting power of the Voting Stock present in person or
represented by proxy at a meeting of Stockholders at which a quorum is
present;
(b) (i) the affirmative vote of at least 75% in voting power of the Voting
Stock present in person or represented by proxy at a meeting of Stockholders
at which a quorum is present, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of the Corporation
entitled to vote thereon not held by the trustees, in their capacity as such,
under the ESOPs, voting separately as a class;
(c) the affirmative vote of at least 75% of the votes entitled to be cast
by the entire Board, which vote must include (i) the affirmative vote of at
least one Union Director and (ii) the affirmative vote of at least a majority
of the votes entitled to be cast by the Directors present at a meeting of the
Board at which a quorum is present, which vote must include the affirmative
vote of at least six of the votes entitled to be cast by the Directors present
at the Board meeting other than the Employee Directors; or
(d) (i) the affirmative vote of at least 75% of the votes entitled to be
cast by the entire Board, which vote must include the affirmative vote of at
least one Union Director, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of the Corporation
entitled to vote thereon not held by the trustees, in their capacity as such,
under the ESOPs, voting separately as a class.
3.1.2 Merger or Consolidation. Until the Termination Date, subject to
Subsection 3.8, notwithstanding that a lesser or no vote may be required by law
of either the Board or the Stockholders, and in addition to any other vote of
the Board or the Stockholders required by law or this Restated Certificate, but
subject in each case to the provisions of Section 253 of the GCL, any merger or
consolidation of the Corporation or any of its Subsidiaries must be approved,
(a) if the merger or consolidation is with or into a Labor Affiliate, by
one of the following:
119
(i) (A) the affirmative vote of at least a majority of the votes
entitled to be cast by the Directors present at a meeting of the Board at
which a quorum is present, which vote must include the affirmative vote of
at least six of the votes entitled to be cast by the Directors present at
the Board meeting other than the Employee Directors, plus (B) the
affirmative vote of at least 75% in voting power of the Voting Stock
present in person or represented by proxy at a meeting of Stockholders at
which a quorum is present;
(ii) (A) the affirmative vote of at least 75% in voting power of the
Voting Stock present in person or represented by proxy at a meeting of
Stockholders at which a quorum is present, plus (B) the affirmative vote of
at least a majority in voting power of the outstanding capital stock of the
Corporation entitled to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as a class;
(iii) the affirmative vote of at least 75% of the votes entitled to be
cast by the entire Board, which vote must include (A) the affirmative vote
of at least one Union Director and (B) the affirmative vote of at least a
majority of the votes entitled to be cast by the Directors present at a
meeting of the Board at which a quorum is present, which vote must include
the affirmative vote of at least six of the votes entitled to be cast by
the Directors present at the Board meeting other than the Employee
Directors; or
(iv) (A) the affirmative vote of at least 75% of the votes entitled to
be cast by the entire Board, which vote must include the affirmative vote
of at least one Union Director, plus (B) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of the
Corporation entitled to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as a class; or
(b) if the merger or consolidation is not with or into a Labor Affiliate,
by either:
(i) the affirmative vote of at least 75% in voting power of the Voting
Stock present in person or represented by proxy at a meeting of
Stockholders at which a quorum is present; or
(ii) the affirmative vote of at least 75% of the votes entitled to be
cast by the entire Board, which vote must include the affirmative vote of
at least one Union Director.
3.1.3 Sale, Lease or Exchange of All or Substantially All Assets. Until the
Termination Date, subject to Subsection 3.8, notwithstanding that a lesser or no
vote may be required by law of either the Board or the Stockholders, and in
addition to any other vote of the Board or the Stockholders required by law or
this Restated Certificate, the sale, lease or exchange of all or substantially
all of the property and assets of the Corporation or of United Air Lines, Inc.,
including its goodwill and its corporate franchises (treating as a sale, lease
or exchange of assets for purposes of Subsection 3.1.3(a) below, the issuance of
ownership interests by any Subsidiary of the Corporation to a Person other than
the Corporation or a wholly-owned Subsidiary of the Corporation if such issuance
would diminish the percentage ownership held by the Corporation or any of its
Subsidiaries), must be approved,
(a) if such sale, lease or exchange is to or with a Labor Affiliate, by one
of the following:
(i) (A) the affirmative vote of at least a majority of the votes
entitled to be cast by the Directors present at a meeting of the Board at
which a quorum is present, which vote must include the affirmative vote of
at least six of the votes entitled to be cast by the Directors present at
the Board meeting other than the Employee Directors, plus (B) the
affirmative vote of at least 75% in voting power of the Voting Stock
present in person or represented by proxy at a meeting of Stockholders at
which a quorum is present;
(ii) (A) the affirmative vote of at least 75% in voting power of the
Voting Stock present in person or represented by proxy at a meeting of
Stockholders at which a quorum is present, plus (B) the affirmative vote of
at least a majority in voting power of the outstanding capital stock of the
Corporation entitled to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as a class;
120
(iii) the affirmative vote of at least 75% of the votes entitled to be
cast by the entire Board, which vote must include (A) the affirmative vote
of at least one Union Director and (B) the affirmative vote of at least a
majority of the votes entitled to be cast by the Directors present at a
meeting of the Board at which a quorum is present, which vote must include
the affirmative vote of at least six of the votes entitled to be cast by
the Directors present at the Board meeting other than the Employee
Directors; or
(iv) (A) the affirmative vote of at least 75% of the votes entitled to
be cast by the entire Board, which vote must include the affirmative vote
of at least one Union Director, plus (B) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of the
Corporation entitled to vote thereon not held by the trustees, in their
capacity as such, under the ESOPs, voting separately as a class; or
(b) if such sale, lease or exchange is not to or with a Labor Affiliate, by
either:
(i) the affirmative vote of at least 75% in voting power of the Voting
Stock present in person or represented by proxy at a meeting of
Stockholders at which a quorum is present; or
(ii) the affirmative vote of at least 75% of the votes entitled to be
cast by the entire Board, which vote must include the affirmative vote of
at least one Union Director.
3.1.4 Dissolution. Until the Termination Date, subject to Subsection 3.8,
notwithstanding that a lesser or no vote may be required by law of either the
Board or the Stockholders, and in addition to any other vote of the Board or the
Stockholders required by law or this Restated Certificate, but subject to the
provisions of Section 275(c) of the GCL, the dissolution of the Corporation must
be approved by either:
(a) the affirmative vote of at least 75% in voting power of the Voting
Stock present in person or represented by proxy at a meeting of Stockholders
at which a quorum is present; or
(b) the affirmative vote of at least 75% of the votes entitled to be cast
by the entire Board, which vote must include the affirmative vote of at least
one Union Director.
3.2 Substantive Amendment to the Restated Bylaws. Subject to the provisions
of this Subsection 3.2 and the bylaws of the Corporation, the Board is expressly
authorized to make, alter or repeal the bylaws of the Corporation. Until the
Termination Date, subject to Subsection 3.8, notwithstanding that a lesser or no
vote may be required by law of either the Board or the Stockholders, and in
addition to any other vote of the Board or the Stockholders required by law or
this Restated Certificate, any Substantive Amendment to the Restated Bylaws must
be approved by one of the following:
(a) (i) the affirmative vote of at least a majority of the votes entitled
to be cast by the Directors present at a meeting of the Board at which a
quorum is present, which vote must include the affirmative vote of at least
six of the votes entitled to be cast by the Directors present at the Board
meeting other than the Employee Directors, plus (ii) the affirmative vote of
at least 75% in voting power of the Voting Stock present in person or
represented by proxy at a meeting of Stockholders at which a quorum is
present;
(b) (i) the affirmative vote of at least 75% in voting power of the Voting
Stock present in person or represented by proxy at a meeting of Stockholders
at which a quorum is present, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of the Corporation
entitled to vote thereon not held by the trustees, in their capacity as such,
under the ESOPs, voting separately as a class;
(c) the affirmative vote of at least 75% of the votes entitled to be cast
by the entire Board, which vote must include (i) the affirmative vote of at
least one Union Director and (ii) the affirmative vote of at least a majority
of the votes entitled to be cast by the Directors present at a meeting of the
Board at which a quorum is present, which vote must include the affirmative
vote of at least six of the votes entitled to be cast by the Directors present
at the Board meeting other than the Employee Directors; or
121
(d) (i) the affirmative vote of at least 75% of the votes entitled to be
cast by the entire Board, which vote must include the affirmative vote of at
least one Union Director, plus (ii) the affirmative vote of at least a
majority in voting power of the outstanding capital stock of the Corporation
entitled to vote thereon not held by the trustees, in their capacity as such,
under the ESOPs, voting separately as a class.
3.3 Significant Labor-Related Business Transaction with a Labor Affiliate.
Until the Termination Date, subject to Subsection 3.8, notwithstanding that a
lesser or no vote may be required by law of either the Board or the
Stockholders, and in addition to any other vote of the Board or the Stockholders
required by law or this Restated Certificate, any Significant Labor-Related
Business Transaction (other than entering into or modifying, amending or
supplementing a Collective Bargaining Agreement) between the Corporation or any
of its Subsidiaries and a Labor Affiliate must be approved on behalf of the
Corporation by either:
(a) the affirmative vote of at least a majority of the votes entitled to be
cast by the Directors present at a meeting of the Board at which a quorum is
present, which vote must include the affirmative vote of at least six of the
votes entitled to be cast by the Directors present at the Board meeting other
than the Employee Directors; or
(b) the affirmative vote of at least a majority in voting power of the
outstanding capital stock of the Corporation entitled to vote thereon not held
by the trustees, in their capacity as such, under the ESOPs, voting separately
as a class.
3.4 Other Extraordinary Matters Requiring Special Voting.
(a) Until the Termination Date, subject to Subsection 3.8, notwithstanding
that a lesser or no vote may be required by law of either the Board or the
Stockholders, and in addition to any other vote of the Board or the
Stockholders required by law or this Restated Certificate, any Other
Extraordinary Matters must be approved by either:
(i) the affirmative vote of at least 75% of the votes entitled to be
cast by the entire Board, which vote must include the affirmative vote of
at least one Union Director; or
(ii) the affirmative vote of at least 75% in voting power of the Voting
Stock present in person or represented by proxy at a meeting of
Stockholders at which a quorum is present.
(b) For purposes of this Restated Certificate, the term ''Other
Extraordinary Matters'' means any of the following:
(i) The entry by the Corporation or any of its Subsidiaries into any
line of business outside the Airline Business;
(ii) The making by the Corporation or any of its Subsidiaries of any
Investment outside the Airline Business if immediately after giving effect
to such proposed Investment the aggregate Investments made by the
Corporation and its Subsidiaries outside the Airline Business would exceed
five percent of the total assets of the Corporation and its Subsidiaries on
a consolidated basis as set forth in the most recent audited financial
statements of the Corporation; provided, that an Investment shall be
excluded from such calculation if the Board determines, pursuant to the
affirmative vote set forth in Subsection 3.4(a)(i), or if the Stockholders
determine, pursuant to the affirmative vote set forth in Subsection
3.4(a)(ii), not to include such Investment for purposes of the test set
forth in this Subsection 3.4(b)(ii);
(iii) The acquisition, directly or indirectly, by the Corporation or any
of its Subsidiaries of all or substantially all of the assets or a majority
of the voting stock or other ownership interests of any Person, whether or
not organized in the United States, engaged, either directly or indirectly,
in the business of
122
transporting persons, property or mail, separately or in combination, for
hire as a common or private air carrier;
(iv) The making by the Corporation or any of its Subsidiaries of any
Investment in any Person, whether or not organized in the United States,
engaged, either directly or indirectly, in the business of transporting
persons, property or mail, separately or in combination, for hire as a
common or private air carrier, other than such Investments made by the
Corporation and its Subsidiaries in the ordinary course of business
(''Ordinary Course Air Carrier Investments''); provided, that the aggregate
of all Ordinary Course Air Carrier Investments outstanding at any time
shall not exceed one-half of one percent of the total assets of the
Corporation and its Subsidiaries on a consolidated basis as set forth in
the most recent audited financial statements of the Corporation; and
provided, further, that an Ordinary Course Air Carrier Investment shall be
excluded from such calculation if the Board determines, pursuant to the
affirmative vote set forth in Subsection 3.4(a)(i), or if the Stockholders
determine, pursuant to the affirmative vote set forth in Subsection
3.4(a)(ii), not to include such Ordinary Course Air Carrier Investment for
purposes of the test set forth in this Subsection 3.4(b)(iv);
(v) The adoption of any material amendment or supplement to the Rights
Agreement or the taking by the Corporation of any material actions pursuant
to the Rights Agreement, including, without limitation, the redemption of
rights under the Rights Agreement;
(vi) The sale, lease, exchange, surrender to or at the direction of a
lessor, or other disposition (any of such transactions being referred to
herein as a ''Disposition'') by the Corporation or any of its Subsidiaries
of assets, tangible or intangible, real or personal (including, without
limitation, goodwill, franchises and the sale of ownership interests in, or
the issuance of ownership interests by (other than director qualifying
shares or the issuance of any other minority ownership interests to the
extent required by law), any of the Corporation's Subsidiaries to a Person
other than the Corporation or a wholly-owned Subsidiary of the Corporation
if such issuance would diminish the percentage ownership held by the
Corporation or any of its Subsidiaries, but excluding from the term
''assets'' for purposes of this Subsection (vi) fixtures, office equipment
and office, cleaning, packaging, lubricating, deicing, sanitation and
similar supplies which for accounting purposes are expensed upon
acquisition and items which but for the application of clauses (ii) through
(vi), (viii) through (xi), (xiv) and (xvi) of Section 1.47 would constitute
Investments)), for Gross Proceeds which, when added to the Gross Proceeds
from
(aa) the Disposition of other such assets during the immediately
preceding 365 day period which ended one business day prior to the date of
such Disposition resulting in Gross Proceeds in excess of $5 million and
(bb) the Disposition of other such assets during the immediately
preceding twelve calendar month period which ended not less than 45 days
nor more than 2 full calendar months prior to the date of such Disposition
resulting in Gross Proceeds of $5 million or less, collectively exceeds
$200 million; provided, however, in all cases the Gross Proceeds identified
in clause (aa) and (bb) shall not include any transactions consummated
prior to the Effective Time and the $5 million set forth in clauses (aa)
and (bb) may be increased by action of the Board on an annual basis based
on the affirmative vote of at least 75% of the votes entitled to be cast by
the entire Board, which vote must include the affirmative vote of at least
one Union Director; provided, further, however, that none of the following
transactions shall constitute an Other Extraordinary Matter for purposes of
this Subsection (vi) (or count against the $200 million Gross Proceeds
calculation above):
(A) secured aircraft financings,
(B) sale-leaseback and leveraged lease transactions, or sales or similar
transfers of receivables, for financing purposes,
123
(C) foreclosure sales of assets subject to bona fide security interests,
and deeds and other dispositions of assets subject to bona fide security
interests in lieu of foreclosure,
(D) Dispositions of assets if replacement assets (consisting of assets
of the same class (i.e., airframes of similar range and payload capability,
engines and facilities similar in character to the assets disposed of, and
ground equipment, spare parts and fixtures) as the assets being disposed of
(which for these purposes shall include the Disposition of assets from a
disassembled aircraft or engine which shall be replaced by a fully
assembled aircraft of similar range and payload capability or engine of
similar character, and similar transactions)) have been ordered (pursuant
to firm commitment, bona fide orders) or acquired within the six calendar
month period prior to such Dispositions of assets (provided, further, that
if replacement assets are so ordered or acquired within 365 days following
the Disposition of assets for which no replacement assets had been
previously acquired, Gross Proceeds from such Disposition shall not
thereafter be included in the $200 million Gross Proceeds calculation above
unless such replacement assets are not actually acquired),
(E) Disposition providing Gross Proceeds in an amount up to 10% of the
book value (net of depreciation) of the Corporation's fixed assets at the
time of the most recent quarterly financial statements of the Corporation
if (x) Directors entitled to cast at least 75% of the votes entitled to be
cast by the entire Board, including all of the Independent Directors,
determine by resolution of the Board that such asset Disposition is
necessary to (I) cure a default under material financing agreements binding
upon the Corporation or any of its Subsidiaries or any of their respective
properties, or avoid a default thereunder that, absent such Disposition,
would be reasonably likely to occur within 90 days, or (II) remedy a
material adverse development in the Corporation's business or condition,
and (y) the Gross Proceeds of such asset Disposition are used to remedy the
condition referred to in clause (x) (provided, that the exception afforded
by this clause (E) shall be available not more than once in any consecutive
five-year period),
(F) Dispositions of damaged tangible assets or tangible assets that are
obsolete in the Airline Business used in the ordinary course of business of
the Corporation or any of its Subsidiaries, excluding airframes, engines
and related spare parts (other than aircraft which may no longer be legally
operated in the United States by the Corporation or United Air Lines, Inc.
and airframes, engines and related spare parts which under applicable
insurance policies have been declared to be a total loss or a constructive
total loss),
(G) without limiting clause (D), (1) leases, subleases, slides, swaps,
trades, transfers, exchanges or similar transactions involving aircraft
take-off and landing authorizations, slots or similar rights, (2) leases,
subleases, exchanges or similar transactions involving vacant land,
building space, parking areas, airport gates or similar real property and
(3) Dispositions of consumables, spare parts, ground equipment or other
similar goods, in each case (x) entered into in the ordinary course of
business, consistent with past practice, and (y) to the extent, in
connection with such Disposition, the Corporation or its Subsidiaries
receives (contemporaneously or over a reasonable time frame) benefits of
substantially the same or similar value and either class or character,
(H) without limiting clause (D), leases, subleases, swaps, trades,
exchanges or similar transactions involving aircraft takeoff and landing
authorization, slots, or similar rights which are not being utilized by the
Corporation or a Subsidiary and where such lack of utilization may subject
such authorizations, slots or rights to loss or forfeiture,
(I) without limiting clause (D), subleases or licenses, in the ordinary
course of business and consistent with past practices, of gates or other
airport facilities not being utilized by the Corporation or a Subsidiary
pursuant to agreements which are cancelable or terminable by the
Corporation on 90 days' notice or less;
124
(J) Dispositions of assets (other than airframes, engines and related
spare parts) if (x) made pursuant to a discrete asset management program
that provides for the Disposition of not more than an aggregate of $25
million of assets and (y) such discrete asset management program is
approved by either the Board pursuant to the affirmative vote set forth in
Subsection 3.4(a)(i), or the Stockholders (following the recommendation of
the Board), pursuant to the affirmative vote set forth in Subsection
3.4(a)(ii); provided, that only one asset management program referred to in
this clause (J) shall be in place in any fiscal year and such program is
subject to such approval on an annual basis;
(K) Dispositions, in the ordinary course of business, of supplies or
spare parts pursuant to ground support, spare part or similar mutual
accommodation arrangements with other United States or foreign air carriers
or pursuant to the provision of maintenance, ground support or similar
support services by the Corporation or any Subsidiary,
(L) Dispositions, in the ordinary course of business consistent with
past practices, of assets which are held for resale by the Corporation or
any Subsidiary (other than airframes and engines),
(M) Dispositions, in the ordinary course of business, of flight
equipment spare parts (other than as part of a transaction or series of
related transactions involving the Disposition of airframes or engines) (x)
which are obsolete, or in excess of reasonably projected needs, with
respect to United's fleet, or (y) for which the costs of repair, or of
redistribution within the Corporation or its Subsidiaries, would exceed the
value of such assets to the Corporation or its Subsidiaries,
(N) Dispositions, in the ordinary course of business, of ground
equipment, fixtures and related spare parts (x) which are obsolete, or in
excess of reasonably projected needs, with respect to the Corporation's or
its Subsidiaries' operations or (y) for which the costs of repair, or of
redistribution within the Corporation or its Subsidiaries, would exceed the
value of such assets to the Corporation or its Subsidiaries,
(O) Dispositions of fuel in the ordinary course of business,
(P) Dispositions of aircraft, engines, propellers, and spare parts owned
or leased by Air Wisconsin, Inc. on the date of execution of the
Recapitalization Agreement,
(Q) Dispositions of assets to lessors, in the ordinary course of
business, in connection with the provision by the Corporation or any
Subsidiary of any replacement engines or spare parts pursuant to
replacement, modification or maintenance obligations under aircraft leases
(financing or otherwise), and
(R) Dispositions of assets which individually, or when aggregated with
other assets in the same or related Dispositions, are not in excess of
$25,000, either with respect to periods prior to December 31, 1994 or
pursuant to a distinct asset management program approved in the same manner
as the procedures set forth in clause (J) above; and
(vii) The issuance by the Corporation of Equity Securities (a ''Non-
Dilutive Issuance'') other than pursuant to Sections 1.6 and 1.10 of the
Recapitalization Agreement to the ESOPs; provided, that such an issuance
shall not constitute an Other Extraordinary Matter if:
(A)(I) Directors entitled to cast at least 75% of the votes entitled
to be cast by the entire Board, including all of the Independent
Directors, determine by resolution of the Board that it is in the best
interests of the Corporation to issue shares of Equity Securities, (II)
such issuance is subject to the First Refusal Agreement and (III) if
such issuance occurs during the Measuring Period (as defined in the
Recapitalization Agreement), the Board by the affirmative vote of a
majority of the votes entitled to be cast by the Directors present at a
meeting of the Board at which a quorum is present, which vote must
include the affirmative votes of both Union Directors, approves an
equitable adjustment to the number of Additional Shares (as defined in
Subsection 1.10(b) of the Recapitalization Agreement) to
125
be issued pursuant to Sections 1.6 and 1.10 of the Recapitalization
Agreement. Any shares of Equity Securities issued in accordance with the
provisions of this Subsection 3.4(b)(vii)(A) shall not be deemed to be
Common Equity for purposes of this Restated Certificate;
(B) Directors entitled to cast at least 75% of the votes entitled to
be cast by the entire Board, including all of the Independent Directors,
determine by a resolution of the Board (I) that the Corporation is
Bankrupt (or, absent a material positive change in the Corporation's
results of operations over the immediately succeeding 90 days from the
results contained in the Corporation's regularly prepared projections,
that in their opinion the Corporation will become Bankrupt within 90
days), which determination is confirmed by written opinions of two
nationally recognized investment banking firms that further opine
(giving effect to the facts and circumstances applicable to the
Corporation, including discussions with prospective equity investors)
that the sale of Equity Securities is necessary to avoid or remedy such
Bankruptcy (the ''Bankruptcy Opinions''), and (II) that the issuance of
additional Equity Securities (the ''Permitted Bankruptcy Equity'') would
cause the Corporation, after giving effect to the proposed issuance, no
longer to be or not to become Bankrupt in the time frame referred to in
the Bankruptcy Opinions (the ''Solvency Determination'').
Notwithstanding the foregoing, the issuance of Permitted Bankruptcy
Equity shall constitute an Other Extraordinary Matter unless (I) such
issuance is in an amount that does not exceed the amount determined by
the Board to be reasonably necessary to obtain sufficient equity
investor participation so as to allow the Board to make the Solvency
Determination, (II) a binding commitment for the sale of such Permitted
Bankruptcy Equity is entered into within 90 days of the delivery of the
Bankruptcy Opinions and (III) the terms of the First Refusal Agreement
have been complied with in all material respects by the Corporation. Any
Permitted Bankruptcy Equity issued in accordance with this Subsection
3.4(b)(vii)(B) shall be included as outstanding Common Equity for
purposes of the definition of the Termination Date; or
(C) Such issuance is pursuant to (I) the exercise, conversion or
exchange of Equity Securities outstanding immediately prior to the
Effective Time, (II) the Corporation's 1981 Incentive Stock Program,
1988 Restricted Stock Plan and Incentive Compensation Plan, each as
amended in accordance with the Recapitalization Agreement, (III) the
Director Incentive Plan or (IV) any other equity incentive compensation
plan approved by the affirmative vote of Directors entitled to cast at
least 75% of the votes entitled to be cast by the entire Board,
including all of the Independent Directors. The shares of Equity
Securities (x) outstanding immediately prior to the Effective Time that
were not included in the definition of ''Fully Diluted Shares'' pursuant
to Subsection 1.10(d) of the Recapitalization Agreement and (y) issued
in accordance with clauses (II), (III) and (IV) of this Subsection
3.4(b)(vii)(C) (in each case including the shares of Equity Securities
underlying such Equity Securities or issuable upon the exercise,
conversion or exchange thereof), shall not be deemed to be Common Equity
for purposes of this Restated Certificate and, along with the other
Equity Securities issued in accordance with clause (I) of this
Subsection 3.4(b)(vii)(C) (and the shares of Equity Securities
underlying such Equity Securities or issuable upon the exercise,
conversion or exchange thereof), shall not be subject to the First
Refusal Agreement.
3.5 Special Voting Provisions with Respect to the Purchase and Sale of Common
Stock. Until the Termination Date, notwithstanding that a lesser or no vote
may be required by law of either the Board or the Stockholders, and in addition
to any other vote of the Board or the Stockholders required by law or this
Restated Certificate, subject, in the case of clause (b) below, to Subsection
3.9, any Common Stock Transaction must be approved by the affirmative vote of at
least a majority of the votes entitled to be cast by the entire Board, which
vote must include the affirmative vote of at least 80% of the votes entitled to
be cast by the Public Directors. For purposes of this Restated Certificate, the
term ''Common Stock Transaction'' means (a) any purchase by the Corporation of
any shares of Common Stock (other than to fulfill its obligations to issue or
retain Common Stock in connection with the exercise of employee options issued
pursuant to employee benefit plans or to retain Common Stock in connection with
tax withholding obligations in connection with the exercise of employee options
or restricted stock) or (b) any sale by the Corporation of any shares of Common
Stock to a company sponsored pension, retirement or other employee benefit plan
for the account of employees (other than pursuant to the first refusal rights
provided in the
126
First Refusal Agreement or in connection with the creation and operation of the
employee stock ownership plans and programs of the Corporation under which the
ESOP Convertible Preferred Stock is issued), whether for cash or non-cash
consideration, including, without limitation, changes in the rates of pay, rules
or working conditions for employees holding beneficial ownership interests in
the ESOP Convertible Preferred Stock.
3.6 Special Provisions with Respect to the Appointment and Removal of
Officers.
3.6.1 Appointment of Successor Chief Executive Officer. Until the
Termination Date, upon the death, resignation, removal or other termination of
employment of the Chief Executive Officer and following the making of a
recommendation by the Executive Committee as to a successor Chief Executive
Officer as provided in Subsection 4.1.5, the affirmative vote of at least a
majority of the votes entitled to be cast by the entire Board shall be required
to elect a successor Chief Executive Officer; provided, however, that the Board
may elect as a successor Chief Executive Officer only a person who is
recommended for such position by the Executive Committee.
3.6.2 Appointment of Other Officers. The officers of the Corporation (other
than the Chief Executive Officer) shall be elected or appointed, annually or at
such other time or times as the Board shall determine, by the Board or by the
Chief Executive Officer pursuant to authority delegated by the Board to the
Chief Executive Officer; provided, however, with respect to the initial
appointment of the Chief Operating Officer following the Effective Time, such
person shall be elected or appointed by the Board and shall not be found to be
unacceptable by two of the three Outside Public Directors.
3.6.3 Term of Office. Each officer of the Corporation shall hold office
until such officer's successor is chosen and qualifies or until such officer's
earlier death, resignation or removal. Any such officer may resign at any time
upon written notice to the Corporation. Such resignation shall take effect on
the date of receipt of such notice or at such later date as is therein
specified, and, unless otherwise specified, the acceptance of such resignation
shall not be necessary to make it effective. The resignation of such officer
shall be without prejudice to the contract rights of the Corporation, if any.
3.6.4 Removal. Until the Termination Date, any officer elected or appointed
by the Board (including, without limitation, the Chief Executive Officer) may be
removed at any time, with or without cause, only by (a) the affirmative vote of
at least a majority of the votes entitled to be cast by the entire Board or (b)
the Chief Executive Officer pursuant to authority delegated by the Board (by the
same vote specified in clause (a) of this Subsection 3.6.4) to the Chief
Executive Officer.
3.6.5 Vacancy. Until the Termination Date, any vacancy occurring in any
office of the Corporation (other than the Chief Executive Officer) shall be
filled either by the Board or the Chief Executive Officer pursuant to authority
delegated by the Board to the Chief Executive Officer.
3.7 Certain Provisions with Respect to (a) the Class I Preferred Stock and the
Independent Directors and (b) the Class SAM Preferred Stock and the
Salaried/Management Employee Director.
(a) Notwithstanding any other provision of this Restated Certificate, (i)
the Corporation may issue Class I Preferred Stock only to an Independent
Director or the initial ''Individual Parties'' under the Class I Stockholders'
Agreement, and (ii) a holder of Class I Preferred Stock may not sell,
transfer, pledge or assign any shares of Class I Preferred Stock or any
interest therein, including, without limitation, by operation of law or
otherwise, other than to the Corporation or to another Independent Director in
accordance with the Class I Stockholders' Agreement. Any sale, transfer,
pledge or assignment of any shares of Class I Preferred Stock, whether by
operation of law or otherwise, in violation of this Subsection 3.7(a) shall be
null and void and of no force and effect. The certificates evidencing shares
of Class I Preferred Stock shall bear a legend describing the transfer
restrictions set forth in this Subsection 3.7(a).
(b) Notwithstanding any other provision of this Restated Certificate, (i)
the Corporation may issue Class SAM Preferred Stock only to a
Salaried/Management Employee Director, a ''Designated Shareholder'' under the
Class SAM Stockholders' Agreement or the initial ''Designated Nominee'' under
the Class SAM
127
Stockholders' Agreement, and (ii) a holder of Class SAM Preferred Stock may
not sell, transfer, pledge or assign any shares of Class SAM Preferred Stock
or any interest therein, including, without limitation, by operation of law or
otherwise, other than to the Corporation or to another Salaried/Management
Employee Director in accordance with the Class SAM Stockholders' Agreement.
Any sale, transfer, pledge or assignment of any shares of Class SAM Preferred
Stock, whether by operation of law or otherwise, in violation of this
Subsection 3.7(b) shall be null and void and of no force and effect. The
certificates evidencing shares of Class SAM Preferred Stock shall bear a
legend describing the transfer restrictions set forth in this Subsection
3.7(b).
3.8 Section 203 of the GCL. Notwithstanding any provision of this Restated
Certificate to the contrary, if any provision of this Restated Certificate by
its terms purports to require for any vote of Stockholders required by Section
203 of the GCL (or any successor section thereto) a greater vote of Stockholders
than that specified in Section 203 of the GCL, then, to the fullest extent
required by law, the provision of Section 203 of the GCL that requires such
specific vote of the Stockholders shall govern and the provision of this
Restated Certificate that would require a greater vote of the Stockholders shall
not apply.
3.9 Employees' Purchase of Equity Securities. Until the Termination Date,
any repeal or modification of, or any amendment or supplement to, the terms of
any resolution of the Board or any of the Corporation's or any of its
Subsidiaries' policies, practices, procedures or employee benefit plans, which
would increase the aggregate amount of Common Equity that may be acquired or
held by the employee trusts or pension, retirement or other employee benefit
plans (including the ESOPs and the Existing Plans) sponsored by the Corporation
or any of its Subsidiaries (''Plans''), may be approved by the affirmative vote
of at least a majority of the votes entitled to be cast by the Directors present
at a meeting of the Board at which a quorum is present, provided that such vote
includes the affirmative vote of both Union Directors, but only if such approval
does not increase the maximum aggregate amount of Common Equity that may be held
by the Plans by an amount in excess of (a) the Adjusted Percentage (as defined
in Section 1.10 of the Recapitalization Agreement), minus (b) the percentage of
the Common Equity then held by the ESOPs. Until the Termination Date, any other
repeal or modification of, or amendment or supplement to, the terms of any such
resolution of the Board or any of such policies, practices, procedures or
employee benefit plans that would in any manner materially affect (other than as
provided in the preceding sentence) the right or ability of the employees of the
Corporation or any of its Subsidiaries to purchase, directly or indirectly, any
Equity Securities, must be approved by the affirmative vote of at least a
majority of the votes entitled to be cast by the Directors present at a meeting
of the Board at which a quorum is present, which vote must include the
affirmative vote of both Union Directors and all of the Outside Public
Directors.
3.10 Construction of Special Voting Provisions. Except as otherwise
expressly provided in this Restated Certificate, where more than one Subsection
of this Section 3 is applicable to an event, transaction or other matter, the
provisions contained in each such Subsection shall apply independently to such
event, transaction or other matter.
3.11 Participation of Flight Attendants. Notwithstanding any other provision
of this Restated Certificate, until the Termination Date, the Corporation shall
not (a) amend in any way this Restated Certificate, (b) amend in any way the
Restated Bylaws, (c) issue any securities of the Corporation or any of its
Subsidiaries or (d) enter into or amend any contract, agreement, arrangement,
understanding or instrument to which the Corporation is a party, in connection
with the participation of the Association of Flight Attendants or any of its
members in any investment in the Corporation or any of its Subsidiaries, unless
the Labor Committee (as defined in Subsection 4.1.7), after complete
examination, with the assistance of outside financial and legal counsel, of such
proposed participation, shall determine (by the affirmative vote of at least a
majority of the votes entitled to be cast by the Directors present at a meeting
of such committee at which a quorum is present, which vote must include the
affirmative vote of at least one Outside Public Director) that the terms of such
participation are fair from a financial point of view to the holders of the
outstanding Common Stock of the Corporation.
Section 4. Board Committees.
4.1 Committees of the Board. Until the Termination Date (subject to
Subsection 2.13(b)), the following committees of the Board shall be constituted
and exist with the membership, functions, powers and authorizations
128
set forth below: Audit Committee, CAP Committee, Compensation Committee,
Compensation Administration Committee, Executive Committee, Independent Director
Nomination Committee, Labor Committee, Outside Public Director Nomination
Committee and Transaction Committee.
4.1.1 Audit Committee. The Audit Committee shall consist of the four
Independent Directors and the three Outside Public Directors or such fewer
number of such Directors (in as nearly as practicable that same proportion of
Independent Directors and Outside Public Directors) as shall qualify for audit
committee membership under applicable rules of the securities exchanges or other
similar trading market on which the Common Stock is traded. The function of the
Audit Committee shall be (a) to review the professional services and
independence of the Corporation's independent auditors and the scope of the
annual external audit as recommended by the independent auditors, (b) to ensure
that the scope of the annual external audit is sufficiently comprehensive, (c)
to review, in consultation with the independent auditors and the internal
auditors, the plan and results of the annual external audit, the adequacy of the
Corporation's internal control systems and the results of the Corporation's
internal audits, (d) to review, with management and the independent auditors,
the Corporation's annual financial statements, financial reporting practices and
the results of each external audit and (e) to undertake reasonably related
activities to those set forth in clauses (a) through (d) of this Subsection
4.1.1. The Audit Committee shall also have the authority to consider the
qualification of the Corporation's independent auditors, to make recommendations
to the Board as to their selection and to review and resolve disputes between
such independent auditors and management relating to the preparation of the
annual financial statements.
4.1.2 CAP Committee. The CAP Committee shall consist of eight Directors,
including four Public Directors, two Independent Directors and the two Union
Directors. Of the four Public Directors, three shall be Outside Public Directors
and one shall be the Chief Executive Officer, if the Chief Executive Officer is
a Public Director. The two Independent Director members shall be appointed by
the Independent Director Nomination Committee, which appointment shall require
the affirmative vote of all of the votes entitled to be cast by the Independent
Directors. The function of the CAP Committee shall be to oversee implementation
of the Corporation's Competitive Action Plan. The CAP Committee shall have the
exclusive authority, acting for and on behalf of the Board and consistent with
the protection of the interests of the holders of the Common Stock, to approve
on behalf of the Corporation any and all modifications of or amendments to the
Competitive Action Plan; provided, however, that to the extent such
modifications or amendments relate to changes to any provision of the
Corporation's Collective Bargaining Agreements, the two Union Directors on the
CAP Committee shall not be considered members of the CAP Committee in connection
therewith and shall neither be entitled to vote nor be counted in determining
the presence of a quorum of such committee in connection therewith.
Notwithstanding the foregoing, the Labor Committee shall have the exclusive
authority on behalf of the Board to approve on behalf of the Corporation any
such modifications or amendments to such Collective Bargaining Agreements. The
CAP Committee shall have the exclusive authority, acting for and on behalf of
the Board, to approve on behalf of the Corporation any and all modifications of
or amendments to the Salaried and Management Employee Investment; provided,
however, that such modifications or amendments must be approved by the
affirmative vote of at least a majority of the votes entitled to be cast by all
the members of the CAP Committee, which vote must include the affirmative vote
of at least two Union Directors and all of the Outside Public Directors.
4.1.3 Compensation Committee. The Compensation Committee shall consist of
seven Directors, including two Independent Directors, two Public Directors and
the three Employee Directors. Of the two Public Directors, one shall be an
Outside Public Director appointed by the Outside Public Director Nomination
Committee, and one shall be the Chief Executive Officer, if the Chief Executive
Officer is a Public Director. The two Independent Director members shall be
appointed by the Independent Director Nomination Committee, which appointment
shall require the affirmative vote of all of the votes entitled to be cast by
the Independent Directors. At all meetings of the Compensation Committee, the
presence of Directors entitled to cast at least a majority of the aggregate
number of votes entitled to be cast by all Directors on such committee,
including the presence of at least one Independent Director, shall be required
to constitute a quorum for the transaction of business. The principal functions
of the Compensation Committee shall be to review and recommend to the Board the
compensation and benefit arrangements to be established for the officers of the
Corporation and to review general policy matters relating to compensation and
benefit arrangements of non-union employees of the Corporation. The Compensation
Committee shall also administer the stock option plans and executive
compensation programs of the Corporation, including
129
bonus and incentive plans applicable to officers and key employees of the
Corporation. Subject to final approval by the Compensation Committee in
accordance with Section 4.1.4, the Compensation Committee may delegate to the
Compensation Administration Committee specific responsibilities with respect to
the Chief Executive Officer's compensation.
4.1.4 Compensation Administration Committee. The Compensation Administration
Committee shall consist of two Independent Directors and one Outside Public
Director, each of whom shall be (a) a ''disinterested person'' or
''disinterested administrator'' or any related successor concepts under Rule
16b-3 (or any successor provision) promulgated pursuant to Section 16 of the
Exchange Act and (b) an ''outside director'' or any related successor concepts
under Section 162(m) (or any successor provision) of the Internal Revenue Code
of 1986, as amended from time to time (the ''Code''). The Outside Public
Director shall be appointed by the Outside Public Director Nomination Committee.
The two Independent Directors shall be appointed by the Independent Director
Nomination Committee, which appointment shall require the affirmative vote of
all the votes entitled to be cast by the Independent Directors. The principal
functions of the Compensation Administration Committee shall be to administer
the stock option plans and executive compensation programs of the Corporation to
the extent such functions cannot or are not appropriate to be performed by the
Compensation Committee in light of any provision of the Code, the securities
laws, any other applicable law or any regulations promulgated under any of the
foregoing and to perform such responsibilities with respect to the Chief
Executive Officer's compensation as shall be delegated by the Compensation
Committee; provided, however, that in order for any action of the Compensation
Administration Committee to be effective, such action must also be approved by
the Compensation Committee (unless such approval could reasonably be expected to
prevent a stock option plan or executive compensation program (or a component
thereof) that is intended to qualify under Rule 16b-3 (or any successor
provision) or to qualify for an exception under such Section 162(m) (or any
successor provision) from receiving the benefits of Rule 16b-3 or qualifying for
such exception, respectively).
4.1.5 Executive Committee. The Executive Committee shall consist of six
Directors, including two Independent Directors, two Public Directors and the two
Union Directors. Of the two Public Directors, one shall be an Outside Public
Director appointed by the Outside Public Director Nomination Committee, and one
shall be the Chief Executive Officer, if the Chief Executive Officer is a Public
Director. The two Independent Director members shall be appointed by the
Independent Director Nomination Committee, which appointment shall require the
affirmative vote of all of the votes entitled to be cast by the Independent
Directors. At all meetings of the Executive Committee, the presence of Directors
entitled to cast at least a majority of the aggregate number of votes entitled
to be cast by all Directors on such committee, including the presence of at
least one Independent Director, shall be required to constitute a quorum for the
transaction of business. Subject to the provisions of the GCL, and except as
otherwise expressly provided in this Restated Certificate, the Executive
Committee shall have and may exercise all of the powers of the Board in the
management and affairs of the Corporation; provided, however, that the Executive
Committee shall not be authorized to (a) take any action with respect to any
Extraordinary Matters, (b) take any action with respect to matters specifically
vested by this Restated Certificate in either the Audit Committee, CAP
Committee, Compensation Committee, Compensation Administration Committee,
Independent Director Nomination Committee, Labor Committee, Outside Public
Director Nomination Committee or Transaction Committee or (c) take any action
which under this Restated Certificate may be taken by the Board only with a
greater or additional vote of the Board or any class of Directors than that
provided for in Subsection 2.11, including, without limitation, any action that
is subject to the requirements of Section 3. In addition to the foregoing, in
the event of the death, resignation, removal or other termination of employment
of the Chief Executive Officer, the Executive Committee shall act as a search
committee in connection with and shall recommend to the Board the appointment of
a successor Chief Executive Officer. The affirmative vote of at least four of
the votes entitled to be cast by the members of the Executive Committee
(excluding the departing Chief Executive Officer, if he or she is a member of
the Executive Committee) shall be required for the Executive Committee to
recommend to the Board a successor Chief Executive Officer; provided, however,
that if the departing Chief Executive Officer is not a member of the Executive
Committee, the affirmative vote of at least five of the votes entitled to be
cast by the members of the Executive Committee shall be required for the
Executive Committee to recommend to the Board a successor Chief Executive
Officer.
130
4.1.6 Independent Director Nomination Committee. The Independent Director
Nomination Committee shall consist of seven Directors, consisting of the four
Independent Directors and the three Employee Directors. The function of the
Independent Director Nomination Committee shall be (a) to nominate, on behalf of
the Board, individuals satisfying the qualifications for Independent Directors
set forth in Subsection 2.4 to be the Board's nominees for election by the
holders of the Class I Preferred Stock to serve as Independent Directors upon
the expiration of the term of Independent Directors then in office, (b) to
appoint, on behalf of the Board, individuals satisfying such qualifications to
serve as Independent Directors upon the occurrence of a vacancy on the Board as
a result of the death, resignation, removal or disqualification of an
Independent Director during his or her term for the remainder of such term and
(c) to appoint Independent Directors to serve on certain Board Committees. The
vote of the Independent Director Nomination Committee required to approve any
such nomination or appointment shall be (i) the affirmative vote of at least a
majority of the votes entitled to be cast by the Independent Directors, plus
(ii) the affirmative vote of at least one Union Director.
4.1.7 Labor Committee. The Labor Committee shall consist of three or more
Directors, including one Outside Public Director, at least one Independent
Director and at least one other Director, as designated by the Board, but shall
not include any Employee Directors. The Labor Committee shall have the exclusive
authority on behalf of the Board to approve on behalf of the Corporation the
entering into of, or any modification or amendment to, a Collective Bargaining
Agreement to which the Corporation or any of its Subsidiaries is a party.
4.1.8 Outside Public Director Nomination Committee. The Outside Public
Director Nomination Committee shall consist of all three Outside Public
Directors. The function of the Outside Public Director Nomination Committee
shall be (a) to nominate on behalf of the Board individuals satisfying the
qualifications for Outside Public Directors set forth in Subsection 2.3 to be
the Board's nominees for election by the holders of the Common Stock to serve as
Outside Public Directors upon the expiration of the term of Outside Public
Directors, (b) to appoint on behalf of the Board individuals satisfying such
qualifications to serve as Outside Public Directors upon the occurrence of a
vacancy on the Board as a result of the death, resignation, removal or
disqualification of an Outside Public Director during his or her term for the
remainder of such term and (c) to appoint Outside Public Directors to serve on
certain Board Committees. In addition to any approval required by law or by
Subsection 3.1.1, any amendment or modification of the rights, powers,
privileges or qualifications of the Outside Public Directors or the Outside
Public Director Nomination Committee must be approved by either (a) all of the
Outside Public Directors or (b) the affirmative vote of at least a majority in
voting power of the outstanding capital stock of the Corporation entitled to
vote thereon not held by the trustees, in their capacity as such, under the
ESOPs, voting separately as a class.
4.1.9 Transaction Committee. The Transaction Committee shall consist of
seven Directors, consisting of the four Independent Directors and the three
Outside Public Directors. The function of the Transaction Committee shall be to
evaluate and advise the Board with respect to any proposed merger or
consolidation of the Corporation or any of its Subsidiaries with or into, the
sale, lease or exchange of all or substantially all of the Corporation's or any
of its Subsidiaries' property or assets to, or a Significant Labor-Related
Business Transaction (other than entering into or modifying, supplementing or
amending a Collective Bargaining Agreement, which shall be within the exclusive
authority of the Labor Committee) with, any Labor Affiliate.
4.1.10 Other Board Committees. Until the Termination Date, at any time, and
from time to time, the Board may, by resolution passed by the affirmative vote
of 80% of the votes entitled to be cast by the entire Board, which vote must
include the affirmative vote of at least one Union Director, designate one or
more other committees of the Board (an ''Other Board Committee'' and, together
with the Audit Committee, CAP Committee, Compensation Committee, Compensation
Administration Committee, Executive Committee, Independent Director Nomination
Committee, Labor Committee, Outside Public Director Nomination Committee and
Transaction Committee, collectively the ''Board Committees''). Except as
otherwise provided in this Restated Certificate, any Other Board Committee, to
the extent permitted under the GCL and provided in a resolution of the Board
passed as aforesaid, shall have and may exercise any of the powers and authority
of the Board in the management of the business and affairs of the Corporation;
provided, however, that, until the Termination Date, no Other Board Committee
shall have the power or authority of the Board with respect to (a) matters
specifically vested by this Restated Certificate in either the Audit Committee,
CAP Committee, Compensation Committee, Compensation Administration
131
Committee, Executive Committee, Independent Director Nomination Committee, Labor
Committee, Outside Public Director Nomination Committee or Transaction
Committee, (b) Extraordinary Matters, (c) the appointment or removal of officers
of the Corporation or (d) any action which under this Restated Certificate may
be taken by the Board only with a greater or additional vote of the Board or any
class of Directors than that provided for in Subsection 2.11, including, without
limitation, any action that is subject to the requirements of Section 3. Other
Board Committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board. Except as otherwise provided in this
Restated Certificate, until the Termination Date each Other Board Committee
shall consist of at least three Directors, including at least one Independent
Director, at least one Union Director (unless both Union Directors consent that
a Union Director need not be a member of such Other Board Committee) and at
least one other Director as designated by the Board.
4.1.11 Union Director Membership on Board Committees. Unless otherwise
agreed upon by both Union Directors, the Union Director membership on each of
the Board Committees on which only one Union Director serves shall be rotated
biennially between the Class IAM Director and the Class Pilot MEC Director.
4.1.12 Quorum and Voting Requirements of Board Committees. Except as
otherwise provided in this Restated Certificate, at all meetings of a Board
Committee the presence of Directors entitled to cast at least a majority of the
aggregate number of votes entitled to be cast by all Directors on such committee
shall constitute a quorum for the transaction of business; provided, however,
that, until the Termination Date, at all meetings of an Other Board Committee,
if less than all of the members of such Other Board Committee are present, a
quorum shall exist only if the number of votes constituting a majority of the
votes present is no greater than the sum of (a) one, plus (b) the aggregate
number of votes entitled to be cast by the Independent Directors present at such
meeting. Each Director serving on a Board Committee shall have one vote;
provided, however, that, until the Termination Date, at any time there is a
vacancy among the Independent Directors designated as members of a Board
Committee of which two or more Independent Directors are members, then with
respect to any action of such Board Committee while such vacancy exists, each
Independent Director serving on such Board Committee shall have a number of
votes equal to a fraction, (a) the numerator of which equals the number of
Independent Directors who would be serving on such committee if there were no
vacancies and (b) the denominator of which equals (i) the number of Independent
Directors who would be serving on such committee if there were no vacancies
minus (ii) the number of vacancies in the Independent Directors designated as
members of such committee. Except as otherwise provided in this Restated
Certificate, any act of a Board Committee shall require the affirmative vote of
a majority of the votes entitled to be cast by the Directors present at a
meeting of such Board Committee (at which a quorum is present) and entitled to
vote on the matter in question.
4.1.13 Effect of Board Committee Action. Any action that is authorized
pursuant to this Restated Certificate or pursuant to a Board resolution adopted
in accordance with Subsection 4.1.10 to be taken by a Board Committee and that
is duly taken by such committee in accordance therewith shall have the same
effect as if such action were taken by the Board.
4.1.14 Retainer of Counsel and Advisors. The CAP Committee and the
Transaction Committee shall have the authority at any time, and from time to
time, to retain independent counsel and independent financial advisors, at the
reasonable expense of the Corporation, for the purpose of advising such
committees in connection with the performance of their functions as described in
this Restated Certificate.
4.2 Board Committees Following the Termination Date.
(a) Upon the occurrence of the Termination Date, the Board may by the
affirmative vote of a majority of the votes entitled to be cast by the entire
Board designate one or more committees of the Board and provide in a
resolution of the Board passed as aforesaid the powers and functions of such
committees to the extent permitted under the GCL; provided, however, that the
number of Union Directors that shall be members of each such committee shall
be the same as the number of Union Directors that served immediately prior to
the Termination Date on the Board Committee, if any, the function of which was
substantially the same as such newly designated committee.
132
(b) Unless otherwise agreed upon by both Union Directors, the Union
Director membership on each committee of the Board following the Termination
Date on which only one Union Director serves shall be rotated annually between
the Class IAM Director and the Class Pilot MEC Director.
SIXTH. (a) A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
(b) Each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a ''proceeding''), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer, of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators: provided, however, that, except as provided in paragraph (c)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Article SIXTH
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition: provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expense incurred by a director or
officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Article SIXTH or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(c) If a claim under paragraph (b) of this Article SIXTH is not paid in full
by the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
133
(d) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article SIXTH shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of this Restated
Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(e) The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
SEVENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate, in the manner now
or hereafter prescribed by the laws of Delaware and this Restated Certificate,
and all rights and powers conferred herein upon stockholders and directors are
granted subject to this reservation.
Upon this Restated Certificate of Incorporation becoming effective (the
''Effective Time''), each share of common stock, par value $5.00 per share, of
the Corporation (''Common Stock'') outstanding immediately prior to the
Effective Time, and each share of Common Stock which immediately prior to the
Effective Time was held by the Corporation as treasury stock, shall be
reclassified as and converted into the following: (i) 0.5 shares of common
stock, par value $0.01 per share, of the Corporation (the ''New Shares'') and
(ii) one one-thousandth of a share of Series D Redeemable Preferred Stock, par
value $.01 per share, of the Corporation; provided, however, that no fractional
New Shares shall be issued, and in lieu thereof the Corporation shall make cash
payments as provided in Section 1.5(f) of the Agreement and Plan of
Recapitalization, dated as of March 25, 1994, as amended from time to time,
among the Corporation and the other parties thereto.
I, the undersigned officer of UAL Corporation, a corporation of the State of
Delaware, Hereby Certify that the foregoing is a true, correct and complete copy
of the Restated Certificate of Incorporation of said Corporation as at present
in force.
In Witness Whereof, I have hereunto subscribed by name and affixed the seal of
this Corporation this 12th day of July 1994.
UAL Corporation
/s/ James M. Guyette
Name: James M. Guyette
Title: Executive Vice President
Attest:
/s/ Francesca M. Maher
Name: Francesca M. Maher
Title: Vice President and Secretary
134